NORDSON CORPORATION
Notice of
20192020 Annual Meeting
and Proxy Statement
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NORDSON CORPORATION
Notice of
20192020 Annual Meeting
and Proxy Statement
Nordson Corporation
28601 Clemens Road
Westlake, Ohio 44145
January 18, 201917, 2020
Dear Shareholder:
It is my pleasure, on behalf of the Board of Directors of Nordson Corporation (the “Board of Directors”), to invite you to attend our annual meeting of shareholders (the “Annual Meeting”), which will be held at the law offices of BakerHostetler LLP, 2000 Key Tower, 127 Public Square, Cleveland, Ohio 44114, at 8:00 a.m., Eastern Time, on Tuesday, February 26, 2019.25, 2020.
The accompanying noticeNotice of Annual Meeting and Proxy Statement describe the items of business that will be discussed and voted upon during the Annual Meeting. It is important that you vote your shares of common stock whether or not you plan to attend the Annual Meeting. You have a choice of voting through the Internet, by telephone, or by returning the enclosed proxy/voting instruction card by mail. If you are a registered shareholder, you may also vote in person at the Annual Meeting. Please refer to the instructions in the enclosed materials.
On behalf of management and the Board of Directors, I want to thank you for your continued support and confidence in 2019.2020.
Sincerely,
MICHAEL J. MERRIMAN, JR.
Chair of the Board of Directors
 | Sincerely, MICHAEL J. MERRIMAN, JR. Chair of the Board of Directors |
NORDSON CORPORATION
NORDSON CORPORATIONNordson Corporation
OF SHAREHOLDERS
To Be Held Tuesday, February 26, 201925, 2020
Date and Time: | Tuesday, February at 8:00 a.m., Eastern | |
| Place: | Law offices of BakerHostetler LLP 2000 Key Tower 127 Public Square Cleveland, Ohio | |
| Items of Business: | 1. To elect as directors 2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending October 31, 3. To approve, on an advisory basis, the compensation of our named executive officers; and 4. To transact other business as may properly come before the meeting or any adjournment or postponement thereof. | |
| Record Date: | Close of business on January 2, | |
A Proxy Statement, Proxy/Voting Instruction Card, and Annual Report to Shareholders, which includes our Annual Report on Form10-K for the fiscal year ended October 31, 2018,2019, accompany this Notice and are also available at:www.nordson.com/en/our-company/investors/annual-reports-and-presentations. The Board of Directors has determined that shareholders of record at the close of business on January 2, 20192020 are entitled to notice of, and to vote during, the Annual Meeting.
By Order of the Board of Directors,
GINA A. BEREDO
Executive Vice President, General Counsel
and Secretary
January 18, 201917, 2020
Westlake, Ohio
Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Shareholders to be held on February 26, 2019:25, 2020:
The Proxy Statement, Proxy/Voting Instruction Card, and the Annual Report to Shareholders, which
includes our Annual Report on FormForm 10-K for the fiscal year ended October 31, 2018,2019, are available at:www.nordson.com/en/our-company/investors/annual-reports-and-presentations.
Nordson Corporation – | | 1 |
This summary highlights information relating to the items to be voted on during the Annual Meeting and important business, compensation, and corporate governance matters. For additional information, please refer to the discussions contained in this Proxy Statement and in our Annual Report onForm 10-K for the fiscal year ended October 31, 20182019 filed with the United States Securities and Exchange Commission on December 14, 201813, 2019 (the “2018“2019 Annual Report”).
2020 ANNUAL MEETING
DATE AND TIME | Tuesday, February 8:00 a.m., Eastern Time | |||
| Law Offices of BakerHostetler LLP 2000 Key Tower 127 Public Square Cleveland, Ohio 44114 USA | |||
RECORD DATE | Close of business on January 2, | |||
| Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for the election of directors and one vote for each of the proposals to be voted on. | |||
| PROPOSAL | REQUIRED VOTE | RECOMMENDATION | ||||||||
1. Election of directors |
| Each nominee must receive a plurality of the votes cast. | FOR the election of each | 11 | ||||||
2. Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2020 |
| Thisnon-binding proposal will be considered approved if more votes are cast in favor than against. | FOR | 29 | ||||||
3. Advisory vote to approve compensation of named executive officers |
| Thisnon-binding proposal will be considered approved if more votes are cast in favor than against. | FOR | 33 | ||||||
| HOW TO VOTE | ||||||
| VIA THE INTERNET | BY TELEPHONE | BY MAIL | IN PERSON | |||
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| www.proxyvote.com | Call1-800-690-6903 in the U.S. or Canada | Follow the instructions on the proxy/voting instruction card | Attend our Annual Meeting and |
Abstentions as to any matter are counted in determining the presence of a quorum at the Annual Meeting. They are not included in the vote count for election of directors. However, abstentions will affect the outcome of the votevotes on Proposals 2 and 3, being equivalent to a vote “against” the Proposals.
| 2 | | Nordson Corporation – |
We will also consider any other matters that may properly be brought before the Annual Meeting and any postponement(s) or
adjournment(s) thereof. As of the date of this Proxy Statement, we have not received notice of other matters that may be properly presented at the Annual Meeting.
The following table provides summary information about our director nominees:
| NOMINEE | PRIMARY OCCUPATION | INDEPENDENT |
MEMBERSHIPS | KEY ATTRIBUTES/ QUALIFICATIONS | ||||||||
Sundaram Nagarajan | President and Chief Executive Officer of Nordson Corporation | No | Executive | Extensive experience in operational leadership, global industrial businesses, strategic vision, acquisitions and divestitures, and public company board experience. | ||||||||
Ginger M. Jones | Retired | Yes | None | Substantial executive financial management experience, understanding of financial accounting and financial matters, international business experience, and public company board experience. | ||||||||
Joseph P. Keithley |
| Yes | Audit; Governance & Nominating | Extensive broad based international business, executive management, and leadership experience, and public company board experience. | ||||||||
| Strategic Advisor of Resilience Capital Partners | Yes | Compensation;
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| Significant executive general management, financial experience, and | ||||||
| President and Chief Executive Officer of Axcelis Technologies, Inc. | Yes | Compensation; Governance & Nominating;
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| Deep operational experience in global industrial businesses, strategic vision, and | ||||||
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Nordson Corporation – | | 3 |
Fiscal year 20182019 was a year of outstandingsolid results in an uncertaina challenging andlow-growth global macroeconomic environment. The following highlights our performance for fiscal year 2018:2019:
| Sales | Operating Profit | Net Income | ||||||||||
Third consecutive year over $2B
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22% of sales |
15% of sales | ||||||||||
| Gross Profit | GAAP Diluted Earnings Per Share(1) | Total Shareholder Return(2) | ||||||||||
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| $5.79 | 3 Year: 65.81%
10 Year: 569.72%
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| Operating Margin | Dividends Paid | |||||||||||||
22%
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dividend has increased
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We define “Total Shareholder Return” as: (share price end of period – share price start of period + dividends paid) / share price start of period. |
| 4 | | Nordson Corporation – |
The following summarizes the structure of our board of directors as of our record date, January 2, 20201, and key elements of our corporate governance framework:
Share Ownership Guidelines | Board Independence | Oversight of Risk | ||||||||||
Share ownership guidelines for directors and executive officers: • Directors – 5x cash retainer • CEO – 5x base salary • CFO – 3x base salary • Other executive officers – 2x base salary | 100% Independent Audit, Compensation, and Governance & Nominating Committee Members 100% Independent Committee Chairs | The Board, as a whole, exercises its oversight responsibilities with respect to material risks The Board has delegated responsibility for the oversight of specific risks to Board committees | ||||||||||
Meeting of Independent Directors | Board Meeting Attendance | Hedging/Pledging Transactions | ||||||||||
Executive sessions of independent directors are conducted during each Board meeting | Each of our directors attended at least committee meetings | Strict policy of no pledging or hedging of company shares by directors or executive officers | ||||||||||
Voting Standard for Election of Directors | Compensation | Board Self-Assessments | ||||||||||
| Plurality vote with director resignation policy for failure to receive a majority vote in uncontested director elections | Ournon-employee director compensation is not excessive when compared tonon-employee director compensation of proxy peers | Board, Committee, and peer self-assessments conducted on a regular basis | ||||||||||
Chief Executive Officer Performance | Board Leadership | Clawback Policy | ||||||||||
Annual review by independent directors | Independent Chair Michael J. Merriman, Jr. | Robust policy | ||||||||||
Advisory Vote on Named Executive Officer Compensation | Shareholder Rights Plan (“Poison Pill”) | Average Age of Independent Directors | ||||||||||
Annual Vote | No shareholder rights plan in place | Age: 63 years | ||||||||||
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| 1 | As of January 2, 2020, the board of directors consisted of ten directors. Michael F. Hilton, our prior President and Chief Executive Officer, retired as a director effective December 31, 2019 and his information is not included in the Governance Highlights summary data. Effective August 1, 2019 and November 26, 2019, the board elected Sundaram Nagarajan and Ginger M. Jones, respectively to the board of directors, and their information is included in the Governance Highlights summary data. |
Nordson Corporation – 2020 Proxy Statement | | 5 |
The information below reflects highlights of our named executive officer compensation program for fiscal year 2018.2019. The tablescharts are not substitutes for, nor do they reflect, all of the information provided in the Summary Compensation Table presented later in this Proxy Statement. During our 20182019 Annual Meeting, approximately 97.70%97.95% of shareholder votes cast were in favor of the compensation paid to our named executive officers. We value this positive endorsement by our shareholders of our executive compensation policies.
Additional information about our compensation philosophy and program, including the compensation awarded to each of our named executive officers, may be found in the “Executive Compensation: Compensation“Compensation Discussion and Analysis” section of this Proxy Statement.
Principal Components of Named Executive Officer Compensation
| Base Salary
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• 25.76% of CEO’s (on an annualized basis) and 28.97% of average named executive officer’s target direct compensation (other than CEO) • Target levels of incentive compensation based on percentage of base salary | ||||||
Annual Cash Incentive Award
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The tables below present FY2016 – FY2018 reported results for the three primary drivers of incentive compensation for the named executive officers – Diluted Earnings per Share, Return on Total Capital, and Revenue:
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Diluted Earnings per Share* Return on Total Capital* Revenue (Billions)
• 48.48% of CEO’s and 51.06% of average named executive officer’s target compensation (other than CEO) aligns interests of executive officers with shareholders’ long-term interests
• Stock options (approximately 40% of long-term compensation opportunity) vest in 25% increments over four years and only have value if the • Restricted share awards (approximately 20% of long-term compensation opportunity) vest over a three-year period and |
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CEO Compensation – 2018 Opportunity and Earned/Realized
| Pay Component | 2018 Compensation Opportunity | 2018 Compensation Realized | ||
Base Salary | $925,000 | $925,000 | ||
Annual Cash Incentive | $925,000 (at target) | $1,082,250 | ||
Long-Term Compensation
Ø FY2016-2018 Performance Share Incentive Award
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Target # of performance share units:
18,400 Grant date fair value at target: $1,245,496
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# of performance share units earned:
34,095 Award settlement date value: $3,844,552
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Ø Other FY 2018 Equity Awards | Stock Options:
55,800 shares $1,942,599 grant date fair value
Restricted Shares:
6,700 shares $855,389 grant date fair value
| Stock Options:
105,000 options exercised in FY 2018 Value Realized: $9,883,940
Restricted Shares:
# of shares vested: 8,049 Value Realized: $1,027,733
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| 6 | | Nordson Corporation – |
GOVERNANCE HIGHLIGHTSCEO Compensation – 2019 Opportunity and Earned/Realized
The following summarizes the structure of our Board of Directors and key elements of our corporate governance framework:Mr. Nagarajan’s Compensation
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Base Salary | $850,000 (annualized) | $212,500 | ||||||
Annual Cash Incentive Award | $850,000 (100% of | $212,500 (guaranteed minimum payout)(3)
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| Performance Shares Target number of 2017-2019 performance share units: 2,198 Value at target: $300,000 |
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2,664
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| (1) | The compensation opportunity amount shown for Mr. Nagarajan includes his annualized base salary, target annual cash incentive award, and the target performance share units representing the grant date fair value of the performance share awards that could have vested if the cumulative diluted earnings per share growth and cumulative revenue growth performance conditions were met for the 2017-2019 performance period. Mr. Nagarajan became our President and Chief Executive Officer effective August 1, 2019.
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| (2) | The amount shown as the compensation realized by Mr. Nagarajan for 2019 includes his base salary, the actual annual cash incentive award, and the value of the performance share units, as of the vesting date, that were realized for the 2017-2019 performance period. The value of the performance share units includes dividends. |
| (3) | Mr. Nagarajan was guaranteed a minimum payout of the Annual Cash Incentive Award of $212,500 as part of his negotiated compensation, which represented a prorated payout of the award at target (25% of $850,000), recognizing that he would serve as Chief Executive Officer for 25% of the fiscal year. |
Nordson Corporation – | | 7 |
Mr. Hilton’s Compensation
| Pay Component | 2019 Compensation Opportunity(1) | 2019 Compensation Realized(2) | ||
Base Salary | $945,000 | $945,000 | ||
Annual Cash Incentive Award | $945,000 (at target) | $675,675 | ||
Long-Term Compensation | Performance Shares | Performance Shares | ||
Target number of 2017-2019 performance share units: 14,900
Grant date fair value at target: $1,545,875 | Number of performance share units earned: 18,059
Award settlement date value: $2,962,760 | |||
Stock Options
51,400 shares $1,594,051 grant date fair value | Stock Options
0 options exercised in FY 2019 Value Realized: $0 | |||
Restricted Shares
6,400 shares $799,360 grant date fair value | Restricted Shares
Number of shares vested: 10,868 Value Realized: $1,361,323 | |||
| (1) | The compensation opportunity amount shown for Mr. Hilton includes his base salary, target annual cash incentive award, the target performance share units representing the grant date fair value of the performance share awards that could have vested if the cumulative diluted earnings per share growth and cumulative revenue growth performance conditions were met for the 2017-2019 performance period, the fair value at grant of option awards calculated with Black-Scholes options pricing, and the fair value at grant of restricted shares calculated at the closing price of our common stock on the date of grant. Mr. Hilton retired as our President and Chief Executive Officer effective August 1, 2019 and served as Senior Advisor to the Company until his retirement, which was effective December 31, 2019. |
| (2) | The amount shown as the compensation realized by Mr. Hilton for 2019 includes his base salary, the actual annual cash incentive award paid in January 2020 for 2019 performance; the value of the performance share units, as of the vesting date, that were realized for the 2017-2019 performance period, the value of the stock options less the option price as of the sale date, that were exercised, and the value of the restricted shares, as of the vesting date, that were vested in FY2019. In each case, the value of the performance share units and restricted share units includes dividends. |
| 8 | | Nordson Corporation – 2020 Proxy Statement |
DIRECTORS SERVING ON BOARDS OF OTHER PUBLIC COMPANIES
Board service by members of our Boardboard of Directorsdirectors is within the limits set by our Governance Guidelines:
“It is the Company’s policy that a Director who is not an executive officer of a public company may serve as a director on up to five other boards of public companies. For Directors who are also serving as an executive officer of a public company, the maximum number of public company boards on which the Director may serve is two in addition to serving as a director on the board of his or her company.”
Lee C. Banks | Parker-Hannifin Corporation (NYSE: PH) | |
Arthur L. George, Jr. | Axcelis Technologies, Inc. | |
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Frank M. Jaehnert | Briggs & Stratton Corporation (NYSE: BGG) Itron, Inc. (Nasdaq: ITRI) | |
Ginger M. Jones | Libby, Inc. (NYSE: LBY) Tronox Limited (NYSE: TROX) | |
Joseph P. Keithley | Axcelis Technologies, Inc. | |
Michael J. Merriman, Jr. (Chair) | Regis Corporation (NYSE: RGS) OMNOVA Solutions Inc. (NYSE: OMN) | |
Sundaram Nagarajan (CEO) | Sonoco Products Company (NYSE: SON) | |
Mary G. Puma | Axcelis Technologies, Inc. | |
Victor L. Richey, Jr. | ESCO Technologies Inc. (NYSE: ESE) | |
Nordson Corporation – | | 9 |
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 26, 201925, 2020
The accompanying proxy is solicited on behalf of the Board of Directors (the “Board”) of Nordson Corporation for use at the 20192020 Annual Meeting. The Annual Meeting will be held at the law offices of BakerHostetler LLP, 2000 Key Tower, 127 Public Square, Cleveland, Ohio 44114 at 8:00 a.m., Eastern Time, on Tuesday, February 26, 201925, 2020 for the following purposes:
| 1. | To elect as directors |
| 2. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending October 31, |
| 3. | To approve, on an advisory basis, the compensation of our named executive officers; and |
| 4. | To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
This Proxy Statement and the accompanying proxy/voting instruction card were first mailed to shareholders on or about January 18, 2019.17, 2020. Our 20182019 Annual Report to Shareholders is enclosed with this Proxy Statement.
This Proxy Statement contains important information regarding our Annual Meeting, the proposals on which you are being asked to vote, information you may find useful in determining how to vote, and information about voting procedures. As used in this Proxy Statement, “we,” “us,” “our,” “Nordson” or the “Company” refers to Nordson Corporation.
10 | | Nordson Corporation – |
PROPOSAL 1: ELECTION OF DIRECTORS WHOSE TERMS EXPIRE IN 20222023
The Governance and& Nominating Committee is responsible for identifying and evaluating nominees for director and for recommending to the Board a slate of nominees for election at the Annual Meeting. Our Board is divided into three classes, with each class serving for three-year terms. With the retirement of Michael F. Hilton, our former President and CEO effective December 31, 2019, and with the elections of Sundaram Nagarajan effective August 1, 2019 and Ginger M. Jones on November 26, 2019, our Board now consists of ten directors. Mr. Hilton’s retirement also created a vacancy in the class of 2021. As a matter of good corporate governance, Mr. Nagarajan and Ms. Jones are standing for election at the 2020 Annual Meeting. We anticipate that, after the director elections at the Annual Meeting, the Governance & Nominating Committee willre-balance the classes to include a minimum of three directors per class and appoint Ms. Jones to the class of 2021 and Mr. Nagarajan to the class of 2023.
The Governance and& Nominating Committee has recommended, and the Board has approved, the persons named as nominees for terms expiring in 20222023 and, unless otherwise marked, a duly executed and properly submitted proxy will be voted for such nominees. Nominees Lee C. Banks, Randolph W. Carson,Sundaram Nagarajan, Ginger M. Jones, Joseph P. Keithley, Michael J. Merriman, Jr., and Victor L. Richey, Jr.Mary G. Puma currently serve as directors. All nominees have agreed to stand for election for a three-year term.term, and the classes will bere-balanced as noted above after the Annual Meeting.
In considering each director nominee and the composition of the Board as a whole, the Governance and& Nominating Committee considers a diverse group of experiences, qualifications, attributes, and skills,including diversity in gender, ethnicity, and race, which that the Governance and& Nominating Committee believes enables a director nominee to make significant contributions to the Board, Nordson, and our shareholders. The Board is committed to an inclusive director search process, which includes actively seeking diverse candidates, including women and minority candidates, for each search the Board undertakes.
Consistent with the Board’s commitment to actively seek diverse candidates, and to enhance the collective experience and expertise of the Board, in 2019 the Board engaged an executive search firm to assist in identifying and recruiting potential candidates for membership on the Board. The firm identified, evaluated and performed background searches of potential nominees, and facilitated interviews. Following the firm’s identification of Ms. Jones as a potential candidate, the Governance & Nominating Committee reviewed Ms. Jones’s qualifications and recommended her for election to the Board. The Board appointed Ms. Jones as a director on November 26, 2019. We believe that Ms. Jones, a seasoned financial executive, is a valuable addition to the Board due to her global perspective, business leadership experience, and financial acumen. We paid customary compensation to the executive search firm for its services.
The current-serving directors, including the nominees, collectively have a mix of various skills and qualifications, some of which are listed in the table below. These collective attributes enable the Board to provide insightful leadership as it strives to advance our strategies and deliver returns to shareholders.
Nordson Corporation – 2020 Proxy Statement |
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| Global Business Experience | Mergers & Acquisitions Experience | |||
enterprises to help oversee the management of our global operations.
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into developing and implementing strategies for growing our businesses.
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| Financial Experience | Public Company CEO Experience | |||
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help drive our operating and financial performance.
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strategy, growth and performance, and create shareholder value.
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| Public Company Board Experience | Capital Allocation Experience | |||
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allocate capital efficiently.
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| Strategy Development Experience | Manufacturing Experience | |||
strategic planning.
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operating performance.
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See director biographies beginning on page 1213 for further detail.
TheAs of our record date, January 2, 2020, the average tenure of our independent directors is 10 years and the average age of our independent directors is 6263 years. Twenty-fiveForty percent of our independent directors represent gender and racial diversity.
In determining whether to recommend a director forre-election, the Governance and& Nominating Committee considers the director’s skills and expertise, participation in and contributions to the activities of the Board, the results of the annual Board evaluation, and past meeting attendance.
We believe that the tenure spectrum of our directors provides an effective mix of deep knowledge and new perspectives. The Board does not believe in a specific limit for the overall length of time an independent director may serve. We believe the addition of Ms. Jones to the Board brings fresh perspective, while the senior-in-service status of Mr. Keithley and Ms. Puma brings deep institutional knowledge and historical context vital to the growth of Nordson. Directors, such as Mr. Keithley and Ms. Puma, who have served on the Board for an extended period can provide valuable insight into the operations and future of the Company based on their experience with, and understanding of, the Company’s history, policies, and objectives. Our Governance Guidelines provide that a director is expected to retire at the conclusion of the Board meeting immediately prior to a director’s 72nd birthday. With respect to Mr. Keithley and Ms. Puma, we see a strategic advantage in theirsenior-in-service status. Not only do they bring experience, deep institutional knowledge, and historical context to the vitality and growth of Nordson, they serve as seasoned advisors to Mr. Hilton.
It is intended that proxies that are duly executed and properly submitted but do not withhold the authority to vote for any or all of the nominees will be voted for the election as directors of all of the nominees named below. At this time, the Board knows of no reason why any nominee might not be a candidate at the 20192020 Annual Meeting. However, in the event any one or more of such nominees becomes unavailable for election, proxies will be voted in accordance with the best judgment of the proxy holder.
The name and age (as of February 26, 2019)25, 2020) of each of the threefive nominees for election as directors for terms expiring in 2022,2023, as well as present directors whose terms will continue after the Annual Meeting, appear below, together with his or her principal occupation for at least the past five years, the year each became a director of the Company and certain other relevant information.
12 | | Nordson Corporation – |
Nominees for Terms Expiring in 2022
2023
| SUNDARAM NAGARAJAN | Director Since: 2019 | Age: 57 |
Director Qualifications: CEO Experience, Public Company, Board Experience Non-independent Director Other Public Boards: Sonoco Products Co. (NYSE: SON) | |||||||
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Business Experience. Mr. Nagarajan is President and Chief Executive Officer of Nordson Corporation. He joined Nordson as President and Chief Executive Officer effective August 1, 2019 following a23-year career with Illinois Tool Works Inc. (NYSE: ITW), a FORTUNE® 200 manufacturer of industrial products and equipment, where he had roles of increasing responsibility. Most recently, he was the executive vice president, ITW Automotive OEM Segment, which position he held since 2015. Current Directorships. Mr. Nagarajan is a director of Sonoco Products Company (NYSE: SON), a global provider of consumer packaging industrial products. Key Attributes, Experiences, and Skills. Mr. Nagarajan is the only member of Nordson’s management serving on our Board. He brings to the Board significant global manufacturing company experience, with a focus on creating value for customers through innovation and industry leading excellence in quality and delivery. Mr. Nagarajan has an intimate understanding of management, leadership, strategy development andday-to-day operations of a global company. Nordson Committees. Executive
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| GINGER M. JONES | Director Since: 2019 | Age: 59 |
Director Qualifications: Financial Expertise, Public Company Board Experience, Global Business Management Independent Director Other Public Boards: Libby, Inc. (NYSE: LBY) Tronox Limited (NYSE: TROX) | |||||||
Retired Senior Vice President and Chief Financial Officer, Cooper Tire & Rubber Company | ||||||||||
Business Experience. Ms. Jones served as the senior vice president and chief financial officer of Cooper Tire & Rubber Company (NYSE: CTB), a provider of car, light truck, medium truck, motorcycle, and racing tires, from 2014 until December 2018 when she retired. Prior to joining Cooper, Ms. Jones served as chief financial officer of Plexus Corporation (Nasdaq: PLXS), a global electronics, engineering and manufacturing service company from 2004-2014. Current Directorships. Ms. Jones is a director of Libby, Inc. (NYSE: LBY), a glass and tableware manufacture, where she chairs the audit committee and is a member of the compensation committee. She is also a director of Tronox Limited (NYSE: TROX), a chemical company, where she chairs the audit committee and is a member of the compensation and human resource committees. Additionally, she also serves on the privately-held board of Hearthside Food Solutions, a producer of high-quality snack food products and packaging services. Key Attributes, Experiences, and Skills. Ms. Jones brings thirty years of accounting and finance skills, in industries ranging from consumer goods, industrial manufacturing, supply chain management and software. She served as a public company CFO for ten years at two different global companies. Ms. Jones has significant finance, financial reporting, and accounting expertise and was formerly a certified public accountant, which provides the Board with valuable financial expertise. Nordson Committees. None
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Nordson Corporation – 2020 Proxy Statement | | 13 |
| JOSEPH P. KEITHLEY | Director Since: 2001 | Age: 71 |
Director CEO Experience, Financial Management Expertise, Global Business Management, Corporate Governance Independent Director Other Public Boards: Axcelis Technologies, Inc. (Nasdaq: ACLS) | |||||||
Retired President and Chief Executive Officer, Keithley Instruments, Inc. | ||||||||||
Business Experience. Mr. Keithley served as chair of the board of Keithley Instruments, Inc., a provider of measurement solutions to the semiconductor, fiber optics, telecommunications, and electronics industries, from 1991 until December 2010 when Keithley Instruments was purchased by Danaher Corporation (NYSE: DHR). He also served as Keithley Instruments’ chief executive officer from November 1993 to December 2010, as president from May 1994 to December 2010, and as a member of its board of directors from 1986 until December 2010. Current Directorships. Mr. Keithley is a director of Axcelis Technologies, Inc. (Nasdaq: ACLS), a provider of equipment and service solutions for the semiconductor manufacturing industry. Key Attributes, Experiences, and Skills. Mr. Keithley previously served as chair of our Board, as chair of the board of Keithley Instruments, and as a director of Materion Corporation (NYSE: MTRN), an integrated producer of high performance engineered materials used in a variety of electrical, electronic, thermal, and structural applications. Mr. Keithley brings extensive, broad-based international business and executive management and leadership experience from his leadership roles at Keithley Instruments to his role as a member of our Board. Among other things, Mr. Keithley draws upon his extensive knowledge of the global semiconductor and electronics industries garnered while leading Keithley Instruments. Mr. Keithley also has extensive public company board and governance experience. Nordson Committees. Audit, Governance & Nominating
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Business Experience. Mr. Banks has been president and chief operating officer of Parker-Hannifin Corporation (NYSE: PH) since February 2015. Parker-Hannifin is the world’s leading diversified manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a wide variety of mobile, industrial, and aerospace markets. Mr. Banks served as executive vice president and operating officer of Parker-Hannifin from 2008 to 2015 and senior vice president and operating officer of Parker-Hannifin from 2006 to 2008.
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Current Directorships.Mr. Banks is a director of Parker-Hannifin.
Key Attributes, Experiences, and Skills. As a senior executive and director of a multi-national corporation, Mr. Banks provides the Board with significant executive general management and operational experiences and a unique perspective in identifying governance, strategic, and tactical risks attendant to a multi-national sales, distribution, manufacturing, and operational footprint.
| MICHAEL J. MERRIMAN, JR. | Director Since: 2008 | Age: 63 |
Director Qualifications: CEO Experience, Financial Management Expertise, Global Business Management, Investor Relations
Independent Director Other Public Boards: Regis Corporation (NYSE: RGS) OMNOVA Solutions Inc. (NYSE: OMN) | |||||||
Strategic Advisor, Resilience Capital Partners | ||||||||||
Business Experience. Mr. Merriman has served as Chair of our Board since February 2018. Mr. Merriman was an operating advisor of Resilience Capital Partners LLC, a private equity firm focused on principal investing in lower, middle-market underperforming and turnaround opportunities from June 2008 until June 2017, and currently serves on the board of one of Resilience’s portfolio companies. Mr. Merriman is also a business consultant for Product Launch Ventures, LLC, a company that he founded in 2004 to pursue consumer product opportunities and provide business advisory services. Mr. Merriman served as president and chief executive officer of Lamson & Sessions Co. (formerly, NYSE: LMS), a manufacturer of thermoplastic conduit, fittings and electrical switch and outlet boxes, from November 2006 to November 2007. Mr. Merriman served as senior vice president and chief financial officer of American Greetings Corporation (formerly, NYSE: AM), a designer, manufacturer and seller of greeting cards and other social expression products, from September 2005 until November 2006. Current Directorships. Mr. Merriman is a director of Regis Corporation (NYSE: RGS), a company that owns, franchises, and operates beauty salons, hair restoration centers and cosmetology education facilities; and of OMNOVA Solutions Inc. (NYSE: OMN), a technology-based company and an innovator of emulsion polymers, specialty chemicals, and decorative and functional surfaces for a variety of commercial, industrial, and residential end uses. Key Attributes, Experiences, and Skills. Mr. Merriman was a director of Invacare Corporation (NYSE: IVC), a global leader in the manufacture and distribution of innovative home and long-term care medical products that promote recovery and active lifestyles from May 2014 until May 2018, and a director of American Greetings from 2006 through August 2013, when American Greetings became a private company. Mr. Merriman also served as a director of RC2 Corporation (formerly, Nasdaq: RCRC), a manufacturer of pre-school toys and infant products, from 2004 until its sale in April 2011. Mr. Merriman’s prior experience as a public company chief executive officer and chief financial officer and his current service on the boards of directors of two publicly traded companies, as well as his experience at Resilience, provides him with valuable experience and significant knowledge in the areas of executive management, strategy, corporate governance, acquisitions and divestitures, finance and financial reporting, product development expertise, and investor relations. Mr. Merriman has significant finance, financial reporting, and accounting expertise and was formerly a certified public accountant, which provides the Board with valuable financial expertise. Nordson Committees. Compensation, Executive | ||||||||||
Nordson Corporation – 2020 Proxy Statement | | 15 |
| MARY G. PUMA | Director Since: 2001 | Age: 62 |
Director Qualifications: CEO Experience, Business Strategy and Operations Expertise, Corporate Governance Independent Director Other Public Boards: Axcelis Technologies, Inc. (Nasdaq: ACLS) | |||||||
President and Chief Executive Officer, Axcelis Technologies, Inc. | ||||||||||
Business Experience. Ms. Puma is president and chief executive officer of Axcelis Technologies, Inc. (Nasdaq: ACLS), a provider of equipment and service solutions for the semiconductor manufacturing industry. Ms. Puma has served as chief executive officer of Axcelis since January 2002. She also served as Axcelis’ president and chief operating officer from 2000 until January 2002, where she played an instrumental role in Axcelis’ spin off from Eaton Corporation (NYSE: ETN), a global diversified industrial manufacturer. Ms. Puma was general manager and vice president of the Implant Systems Division of Eaton from 1998 to 2000. Current Directorships. Ms. Puma is a director of Axcelis. From May 2005 to May 2015, Ms. Puma was chair of the board of Axcelis. Key Attributes, Experiences, and Skills. Ms. Puma contributes extensive executive management experience in an international, technology-driven business and possesses a thorough knowledge of corporate governance and strategy development. Ms. Puma brings valuable experience in compensation and talent management planning matters to our Compensation Committee. Nordson Committees. Compensation, Governance & Nominating, Executive | ||||||||||
Present Directors with Terms Expiring in 2021
| ARTHUR L. GEORGE, JR. | Director Since: 2012 | Age: 58 |
Director Qualifications: Business Strategy and Operations Expertise, Global Business Management, Technology Expertise Independent Director Other Public Boards: Axcelis Technologies, Inc. (Nasdaq: ACLS) | |||||||
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Business Experience. Mr. George served as senior vice president and manager, Analog Engineering Operations of Texas Instruments Incorporated from 2011 until his retirement in March 2014. Texas Instruments (Nasdaq: TXN) is one of the world’s largest semiconductor companies and a highly innovative, high performing global leader in analog, embedded processing, and wireless technologies. Mr. George was senior vice president and worldwide general manager, High Performance Analog of Texas Instruments from 2006 to 2011. Current Directorships. Mr. George is a director of Axcelis Technologies, Inc. (Nasdaq: ACLS), a provider of equipment and service solutions for the semiconductor manufacturing industry. Key Attributes, Experiences, and Skills. Mr. George brings to the Board significant executive and general management experience as well as extensive operational and new product development experiences in high technology markets. Mr. George’s experience with high performance analog products used in a wide range of industrial products gives him insight on a diverse set of industries and affords the Board a unique perspective in identifying strategic and tactical risks attendant to the semiconductor electronics market. Nordson Committees. Audit
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| FRANK M. JAEHNERT | Director Since: 2012 | Age: 62 |
Director Qualifications: CEO Experience, Financial Management Expertise, Business Strategy & Operations Independent Director Other Public Boards: Briggs & Stratton Corporation (NYSE: BGG) Itron, Inc. (Nasdaq: ITRI) | |||||||
Retired President and Chief Executive Officer, Brady Corporation | ||||||||||
Business Experience. Mr. Jaehnert served as chief executive officer and president of Brady Corporation (NYSE: BRC), a leading provider of high performance labels and signs, safety devices, printing systems, and software, from April 2003 through October 2013. Mr. Jaehnert has been the chief executive officer and president of a global manufacturing business. He also served as chief financial officer of that business. His prior work experience includes various financial positions in Germany and in the United States for Robert Bosch GmbH, an international manufacturer of automotive, communications, industrial, and consumer products. Current Directorships. Mr. Jaehnert is a director of Briggs & Stratton Corporation (NYSE: BGG), a world leader in gasoline engines for outdoor power equipment, portable generators, and lawn and garden powered equipment and related accessories. He is also a director of Itron, Inc. (Nasdaq: ITRI), a world-leading technology and services company dedicated to the resourceful use of energy and water and providing comprehensive solutions that measure, manage, and analyze energy and water. Key Attributes, Experiences, and Skills. Mr. Jaehnert served as a director of Brady from April 2003 through October 2013. Mr. Jaehnert received the equivalent of a master of business administration degree from the University of Stuttgart, Germany, and has been designated as a “financial expert” on the Audit Committee, as described under the “Committees of the Board of Directors” section of this Proxy Statement. Mr. Jaehnert’s experience as head of a diversified international business and his expertise in finance and operations enable him to make significant contributions to discussions regarding the Company’s strategy and the activities of the Audit Committee. Nordson Committees. Audit, Executive
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Present Directors with Terms Expiring in 2022
| LEE C. BANKS | Director Since: 2010 | Age: 57 |
Director Qualifications: Business Strategy & Operations Expertise, Merger & Acquisition Experience, Global Business Independent Director Other Public Boards: Parker-Hannifin Corporation (NYSE: PH) | |||||||
President and Chief Executive Officer, Parker-Hannifin Corporation | ||||||||||
Business Experience. Mr. Banks has been president and chief operating officer of Parker-Hannifin Corporation (NYSE: PH), the world’s leading diversified manufacturer of motion and control technologies and systems, since February 2015. Mr. Banks served as executive vice president and operating officer of Parker-Hannifin from 2008 to 2015 and senior vice president and operating officer of Parker-Hannifin from 2006 to 2008. Current Directorships. Mr. Banks is a director of Parker-Hannifin. Key Attributes, Experiences, and Skills. As a senior executive and director of a global corporation, Mr. Banks provides the Board with significant executive general management and operational experiences and a unique perspective in identifying governance, strategic, and tactical risks attendant to a multi-national sales, distribution, manufacturing, and operational footprint. Nordson Committees. Compensation
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Nordson Corporation – 2020 Proxy Statement | | 17 |
| RANDOLPH W. CARSON | Director | Age: 69 |
Director Qualifications: Business Strategy & Operations Expertise, Financial Management Experience, Global Business
Independent Director Other Public Boards: None |
Retired Chief Executive Officer, Eaton Corporation’s Electrical Group
Business Experience. From 2000 to February 2009, Mr. Carson served as chief executive officer of Eaton Corporation’s Electrical Group. Eaton (NYSE: ETN) is a global, diversified industrial manufacturer and technology leader in electrical components and systems for power quality, distribution, and control. Mr. Carson retired from Eaton in May 2009 following ten years with the company. Prior to Eaton Corporation, Mr. Carson held several executive positions with Rockwell International.
Current Directorships. Mr. Carson is a director of Southwire Company, LLC, the leading North American supplier of wire and cable products.
Key Attributes, Experiences, and Skills. Mr. Carson served as a director of Fairchild Semiconductor International, Inc. (formerly, Nasdaq: FCS), a leading global manufacturer of semiconductor devices, until September 2016, when ON Semiconductor Corporation (Nasdaq: ON) closed its acquisition of Eaton Corporation’s Electrical Group (NYSE: ETN). Eaton is a global, diversified industrial manufacturer and technology leader in electrical components and systems for power quality, distribution, and control. Mr. Carson retired from Eaton in May 2009 following ten years with the company. Prior to Eaton Corporation, Mr. Carson held several executive positions with Rockwell International (formerly, NYSE: ROK).
Current Directorships. Mr. Carson is a director of Southwire Company, LLC, the leading North American supplier of wire and cable products.
Key Attributes, Experiences, and Skills. Mr. Carson served as a director of Fairchild Semiconductor International, Inc. (formerly, Nasdaq: FCS), a leading global manufacturer of semiconductor devices, until September 2016, when ON Semiconductor Corporation (Nasdaq: ON) acquired Fairchild. Mr. Carson served as chair of the board of GrafTech International, Ltd. (NYSE: EAF), a global manufacturer of carbon and graphite products, prior to GrafTech becoming an indirect wholly-owned affiliate of Brookfield Asset Management Inc. (NYSE: BAM) (TSX: BAM.A) (Euronext: BAMA).
Our Board believes that Mr. Carson’s deep operational experience in global industrial businesses enables him to provide unique insight to our Board with respect to meeting marketplace challenges, implementing Lean and other productivity initiatives, integrating business units, and anticipating and planning for commercial risk and uncertainties. Together with his experience, strategic vision, and understanding of financial accounting and financial matters, our Board believes Mr. Carson is well qualified to serve as a member of our Board. Mr. Carson’s public company board experience contributes to his familiarity with current issues and his ability to identify and address matters that come before the Governance & Nominating and Audit Committees on which he serves.
Nordson Committees. Audit, Governance & Nominating
| VICTOR L. RICHEY, JR. | Director Since: 2010 | Age: 62 |
Director Qualifications: CEO Experience, Business Strategy & Operations Expertise, Public Company Board Independent Director Other Public Boards: ESCO Technologies Inc. (NYSE: ESE) | |||||||
Chair, President, and Chief Executive Officer, ESCO Technologies Inc. | ||||||||||
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Business Experience. Mr. Richey has been chair of the board, president, and chief executive officer of ESCO Technologies Inc. (NYSE: ESE) since 2003. ESCO Technologies manufactures highly-engineered filtration and fluid control products for the aviation, space, and process markets worldwide; is the industry leader in RF shielding and EMC test products; provides diagnostic instruments, software, and services for the benefit of the electric utility industry and industrial power users;Business Experience. Mr. Richey has been chair of the board, president, and chief executive officer of ESCO Technologies Inc. (NYSE: ESE) since 2003. ESCO Technologies manufactures highly-engineered filtration and fluid control products for the aviation, space, and process markets worldwide, is the industry leader in RF shielding and EMC test products, provides diagnostic instruments, software, and services for the benefit of the electric utility industry and industrial power users, and produces custom thermoformed packaging, pulp-based packaging, and specialty products for medical and commercial markets.
Current Directorships. Mr. Richey is chair of the board of ESCO Technologies.
Key Attributes, Experiences, and Skills. Our Board believes Mr. Richey provides a breadth of skills critical to the Board’s ability to discharge its oversight responsibility. Mr. Richey has extensive experience as chair, president, and chief executive officer of a diversified global producer and marketer of technology, and he has significant executive management and board experience at public and private companies within some of our end markets, including the semiconductor industry.
Present Directors with Terms Expiring in 2020
Key Attributes, Experiences, and Skills. Our Board believes Mr. Richey provides a breadth of skills critical to the Board’s ability to discharge its oversight responsibility. Mr. Richey has extensive experience as chair, president, and chief executive officer of a diversified global producer and marketer of technology, and he has significant executive management and board experience at public and private companies within some of our end markets, including the semiconductor industry.
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Business Experience. Mr. Keithley served as chair of the board of Keithley Instruments, Inc., a provider of measurement solutions to the semiconductor, fiber optics, telecommunications, and electronics industries, from 1991 until December 2010 when Keithley Instruments was purchased by Danaher Corporation (NYSE: DHR). He also served as Keithley Instruments’ chief executive officer from November 1993 to December 2010, as president from May 1994 to December 2010, and as a member of its board of directors from 1986 until December 2010.
Current Directorships. Mr. Keithley is a director of Axcelis Technologies, Inc. (Nasdaq GS: ACLS), a provider of equipment and service solutions for the semiconductor manufacturing industry.
Key Attributes, Experiences, and Skills. Mr. Keithley previously served as chair of our Board, as chair of the board of Keithley Instruments, and as a director of Materion Corporation (NYSE: MTRN), an integrated producer of high performance engineered materials used in a variety of electrical, electronic, thermal, and structural applications. Mr. Keithley brings extensive, broad-based international business and executive management and leadership experience from his leadership roles at Keithley Instruments to his role as a member of our Board. Among other things, Mr. Keithley draws upon his extensive knowledge of the global semiconductor and electronics industries garnered while leading Keithley Instruments. Mr. Keithley also has extensive public company board and governance experience.
MICHAEL J. MERRIMAN, JR.
Age: 62
Director Since 2008
Business Experience. Mr. Merriman has served as chair of our Board since February 2018. Mr. Merriman was an operating advisor of Resilience Capital Partners LLC from June 2008 until June 2017, and currently serves on the board of one of Resilience’s portfolio companies. Resilience is a private equity firm focused on principal investing in lower middle market underperforming and turnaround opportunities. Mr. Merriman is also a business consultant for Product Launch Ventures, LLC, a company that he founded in 2004 to pursue consumer product opportunities and provide business advisory services. Mr. Merriman served as president and chief executive officer of Lamson & Sessions Co. (formerly, NYSE: LMS), a manufacturer of thermoplastic conduit, fittings and electrical switch and outlet boxes, from November 2006 to November 2007. Mr. Merriman served as senior vice president and chief financial officer of American Greetings Corporation (formerly, NYSE: AM), a designer, manufacturer and seller of greeting cards and other social expression products, from September 2005 until November 2006.
Current Directorships. Mr. Merriman is a director of Regis Corporation (NYSE: RGS), a company that owns, franchises, and operates beauty salons, hair restoration centers and cosmetology education facilities; and of OMNOVA Solutions Inc. (NYSE: OMN), a technology-based company and an innovator of emulsion polymers, specialty chemicals, and decorative and functional surfaces for a variety of commercial, industrial, and residential end uses.
Key Attributes, Experiences, and Skills. Mr. Merriman was a director of Invacare Corporation (NYSE: IVC), a global leader in the manufacture and distribution of innovative home and long-term care medical products that promote recovery and active lifestyles, until May 2018, and a director of
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American Greetings from 2006 through August 2013 when American Greetings became a private company. Mr. Merriman also served as a director of RC2 Corporation (formerly, Nasdaq: RCRC), a manufacturer ofpre-school toys and infant products, from 2004 until its sale in April 2011.
Mr. Merriman’s prior experience as a public company chief executive officer and chief financial officer and his current service on the boards of directors of two publicly traded companies, as well as his experience at Resilience, provides him with valuable experience and significant knowledge in the areas of executive management, strategy, corporate governance, acquisitions and divestitures, finance and financial reporting, product development expertise, and investor relations. Mr. Merriman has significant finance, financial reporting, and accounting expertise and was formerly a certified public accountant, which provides the Board with valuable financial expertise.
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Business Experience. Ms. Puma is president and chief executive officer of Axcelis Technologies, Inc. (Nasdaq GS: ACLS). Axcelis is a provider of equipment and service solutions for the semiconductor manufacturing industry. Ms. Puma has served as chief executive officer of Axcelis since January 2002.
Current Directorships. Ms. Puma is a director of Axcelis. From May 2005 to May 2015, Ms. Puma was chair of the board of Axcelis.
Key Attributes, Experiences, and Skills. Ms. Puma contributes extensive executive management experience in an international, technology-driven business and possesses a thorough knowledge of corporate governance and strategy development. Ms. Puma brings valuable experience in compensation and talent management planning matters to our Compensation Committee.
Present Directors with Terms Expiring in 2021
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Business Experience. Mr. George served as senior vice president and manager, Analog Engineering Operations of Texas Instruments Incorporated from 2011 until his retirement in March 2014. Texas Instruments (Nasdaq: TXN) is one of the world’s largest semiconductor companies and a highly innovative, high performing global leader in analog, embedded processing, and wireless technologies. Mr. George was senior vice president and worldwide general manager, High Performance Analog of Texas Instruments from 2006 to 2011.
Current Directorships. Mr. George is a director of Axcelis Technologies, Inc. (Nasdaq GS: ACLS), a provider of equipment and service solutions for the semiconductor manufacturing industry.
Key Attributes, Experiences, and Skills. Mr. George brings to the Board significant executive and general management experience as well as extensive operational and new product development experiences in high technology markets. Mr. George’s experience with high performance analog products used in a wide range of industrial products gives him insight on a diverse set of industries and affords the Board a unique perspective in identifying strategic and tactical risks attendant to the semiconductor electronics market.
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Business Experience. Mr. Hilton became Nordson’s president and chief executive officer effective January 2010. Prior to his joining Nordson, Mr. Hilton was senior vice president and general manager for Air Products and Chemicals, Inc. (NYSE: APD) from 2007 until 2010, with specific responsibility for leading the company’s $2 billion global Electronics and Performance Materials segment. Air Products and Chemicals serves customers in industrial, energy, technology, and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services.
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Current Directorships. Mr. Hilton is a director of Ryder System, Inc. (NYSE: R), a FORTUNE® 500 provider of leading-edge transportation, logistics, and supply chain management solutions. He is also a director of Lincoln Electric Holdings, Inc. (Nasdaq: LECO). Lincoln Electric is the world leader in the design, development, and manufacture of arc welding products, robotic arc welding systems, plasma and oxyfuel cutting equipment and has a leading global position in the brazing and soldering alloys market.
Key Attributes, Experiences, and Skills. Mr. Hilton is the only member of Nordson’s management serving on our Board. With over 30 years of global manufacturing industry experience, Mr. Hilton brings to the Board an intimate understanding of management leadership, strategy development, andday-to-day operations of a multi-national company, including product line management, new product technology and talent development, manufacturing, distribution and other sales channels, business processes, international operations, and global markets.
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Business Experience. Mr. Jaehnert served as chief executive officer and president of Brady Corporation (NYSE: BRC) from April 2003 through October 2013. Brady is an international manufacturer and marketer of complete solutions that identify and protect premises, products, and people. Brady’s core capabilities in manufacturing, channel management, printing systems, precision engineering and materials expertise make it a leading supplier to customers in general manufacturing, maintenance and safety, process industries, construction, electrical, telecommunications, electronics, laboratory/healthcare, airline/transportation, brand protection, education, governmental, public utility, and a variety of other industries.
Current Directorships. Mr. Jaehnert is a director of Briggs & Stratton Corporation (NYSE: BGG), a world leader in gasoline engines for outdoor power equipment, portable generators, and lawn and garden powered equipment and related accessories. He is also a director of Itron, Inc. (Nasdaq: ITRI), a world-leading technology and services company dedicated to the resourceful use of energy and water and providing comprehensive solutions that measure, manage, and analyze energy and water.
Key Attributes, Experiences, and Skills. Mr. Jaehnert served as a director of Brady from April 2003 through October 2013. Mr. Jaehnert has been the chief executive officer and president of a global manufacturing business. He also served as chief financial officer of that business. His prior work experience includes various financial positions in Germany and in the United States for Robert Bosch GmbH, an international manufacturer of automotive, communications, industrial, and consumer products. Mr. Jaehnert received the equivalent of a master of business administration degree from the University of Stuttgart, Germany, and has been designated as a “financial expert” on the Audit Committee, as described under the “Committees of the Board of Directors” section of this Proxy Statement. Mr. Jaehnert’s experience as head of a diversified international business and his expertise in finance and operations enable him to make significant contributions to discussions regarding the Company’s strategy and the activities of the Audit Committee.
No shareholder or group that beneficially owns 1% or more of our outstanding common shares has recommended a candidate for election as a director at the 20192020 Annual Meeting.
Cumulative Voting
Voting for directors will be cumulative if any shareholder provides notice in writing to the President, an Executive Vice President, or the Secretary of Nordson of a desire to have cumulative voting. The notice must be received at least 48 hours before the time set for the Annual Meeting, and an announcement of the notice must be made at the beginning of the meeting by the Chair or the Secretary, or by or on behalf of the shareholder giving the notice. If cumulative voting is in effect, each shareholder will be entitled to cast, in the election of directors, a number of votes equal to the product of the number of directors to be elected multiplied by the number of shares that the shareholder is voting. Shareholders may cast all of these votes for one nominee or distribute them among several
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nominees, as they see fit. If cumulative voting is in effect, shares represented by each properly submitted proxy will also be voted on a cumulative basis, with the votes distributed among the nominees in accordance with the judgment of the persons named on the proxy/voting instruction card.
To date, we have not received a notice from any shareholder of his, her, or its intention to request cumulative voting.
Majority Voting Policy
The Director nominees receiving the greatest number of votes will be elected (plurality standard). However, our majority voting policy states that any Director who fails to receive a majority of the votes cast in his/her favor is required to submit his/her resignation to the Board. The Governance and& Nominating Committee of the Board would then consider each resignation and determine whether to accept or reject it. Abstentions and brokernon-votes will have no effect on the election of a Director and are not counted under our majority voting policy.
Required Vote
The election of directors requires the affirmative vote of the holders of a plurality of the shares of common stock voting at the Annual Meeting. Under the plurality voting standard, the nominees receiving the most “for” votes will be elected, regardless of whether any nominee received a majority of the votes. Only shares that are voted in favor of a particular nominee will be counted toward such nominee’s achievement of a plurality. Shares present at the meeting that are not voted for a particular nominee or shares present by proxy where the shareholder properly withheld authority to vote for such nominee (including brokernon-votes) will not be counted toward such nominee’s achievement of a plurality, but will be counted for quorum purposes.
RECOMMENDATION REGARDING PROPOSAL 1:
The Board of Directors recommends that you vote“FOR” all nominees as directors. Proxies received by the Board will be voted for all nominees unless shareholders specify a contrary vote.
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Nordson Corporation – | | 19 |
Corporate Governance Documents
The following corporate governance documents are available at:www.nordson.com/en/our-company/corporate-governance.
Governance Guidelines Committee Charters Director Recruitment and Performance Guidelines Conflict Minerals Policy Related Persons Transaction Policy Share Ownership Guidelines Code of Ethics and Business Conduct Code of Ethics for Suppliers and Third-Party Providers |
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The Governance Guidelines contain general principles regarding the functions of Nordson’s Board of Directors (the “Board”) and Board committees. The Annual Report to Shareholders, which includes the 20182019 Annual Report and this Proxy Statement, are available at:www.nordson.com/en/our-company/investors/annual-reports-and-presentationsinvestors. Upon request, copies of the Annual Report to Shareholders will be mailed to you (at no charge) by contacting Nordson Corporation, Attn: Corporate Communications, 28601 Clemens Road, Westlake, Ohio 44145. The information in, or that can be accessed through, our internet site is not part of this Proxy Statement, and all references herein to our internet site are for reference purposes only.
Director Independence
In accordance with the listing standards of The Nasdaq Stock Market LLC (“Nasdaq”), and our Governance Guidelines, the Board must consist of a majority of independent directors. The Board has determined that Ms.Mses. Puma and Jones, and Messrs. Banks, Carson, George, Jaehnert, Keithley, Merriman, and Richey each satisfy the definition of “independent director” under these listing standards. Mr. HiltonNagarajan is not an independent director because he serves as our President and Chief Executive Officer. In addition, Mr. Hilton, who served as a director during the 2019 fiscal year and retired from the Board effective December 31, 2019, was determined not to be an independent director because he served as our President and Chief Executive Officer until August 1, 2019. Our Governance Guidelines also require that our Audit, Compensation, and Governance & Nominating Committees each be comprised of independent directors who meet all of the independence and experience requirements of Nasdaq.
In determining independence, each year the Board affirmatively determines, among other things, whether directors have a “material relationship” with Nordson. When assessing the “materiality” of a director’s relationship with Nordson, the Board considers all relevant facts and circumstances, including a consideration of the persons or organizations with which the director has an affiliation. Where an affiliation is present, the Board considers the frequency or regularity of the provision of services, whether the services are being carried out at arm’s length in the ordinary course of business and whether the services are being provided substantially on the same terms to Nordson as those prevailing at the time from unrelated parties for comparable transactions. With respect to Audit Committee members, the Board must affirmatively determine that such directors, in addition to the general independence requirements described above, satisfy certain financial education requirements and do not, among other things, accept any consulting, advisory, or other compensatory fee from Nordson. With respect to Compensation Committee members, the Board must consider, in addition to the general independence requirements described above, the source of compensation of such directors, including any consulting, advisory or other compensatory fee paid by Nordson to the directors, and whether such directors are affiliated with Nordson, a subsidiary of Nordson or an affiliate of a subsidiary of Nordson.
As part of our commitment to ensuring director independence, we have a monitoring and reporting program with respect to purchases of products supplied by, or to, a company which may employ a director or which may have a director serving on its board to ensure the avoidance of any conflicts of interest resulting from our relationship. Mr. Banks, a director, servesAll transactions and relationships evaluated by the Board involved only the ordinary course of business purchase and sale of goods and services at companies where directors serve as presidentan officer or director. The table below describes the transactions and chief operating officerrelationships the Board considered in 2019 and, in each case, the amounts
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involved were less than the greater of Parker-Hannifin Corporation. Mr. Richey, a director, serves$1 million or 2% of our and the recipient’s respective annual revenues in each of the last three years. Ginger M. Jones is not included in the table because she did not serve as a director in 2019.
| Director / Nominee | Entity and Relationship | Transactions | % of Entity’s Annual Revenues in each of the last 3 years | |||
Lee C. Banks | Parker-Hannifin Corporation President and Chief Operating Officer | We sell products to and purchase products from Parker-Hannifin Corporation. | Less than 1% | |||
Arthur L. George, Jr. | Axcelis Technologies, Inc. Director | We sell products to Axcelis Technologies, Inc. | Less than 1% | |||
Frank M. Jaehnert | Briggs & Stratton Director | We sell products to Briggs & Stratton. | Less than 1% | |||
Frank M. Jaehnert | Itron, Inc. Director | We sell products to Itron, Inc. | Less than 1% | |||
Joseph P. Keithley | Axcelis Technologies, Inc. Director | We sell products to Axcelis Technologies, Inc. | Less than 1% | |||
Sundaram Nagarajan | Sonoco Products Company Director | We sell products to and purchase products from Sonoco Products Company. | Less than 1% | |||
Mary G. Puma | Axcelis Technologies, Inc. President and Chief Operating Officer | We sell products to Axcelis Technologies, Inc. | Less than 1% | |||
Victor L. Richey | ESCO Technologies Inc. Director | We sell products to and purchase products from ESCO Technologies Inc. | Less than 1% | |||
Based on this review and the information provided in response to annual questionnaires completed by each independent director regarding employment, business, familial, compensation, and other relationships with the Company and management, the Board has determined that every director and director nominee (i) has no material relationship with Nordson, (ii) satisfies all of ESCO Technologies Inc. These two companies purchase components manufactured bythe Nasdaq independence standards and our independence standards, and (iii) is independent, with the exception of Sundaram Nagarajan, who is an employee director, and Michael Hilton, who served as a number of our business units in volumes that are insignificant when compared todirector during the respective companies’ and Nordson’s annual revenue for2019 fiscal year 2018.until his retirement on December 31, 2019 and was an employee director. The Board does not believehas also determined that these relationships impair the independenceeach member of Messrs. Banks or Richey or that they have any material interest in any transaction between Nordsonits Audit, Compensation, and Parker and ESCO, respectively.Governance & Nominating Committees is an independent director. For more information on our review standards for related party transactions, see “Review of Transactions with Related Persons” below.
|
Director Qualifications
Through its selection and vetting process, the Governance and& Nominating Committee seeks not only to identify directors that meet basic criteria, but also to enhance the diversity of the Board in such areas
as professional experience, race, gender, ethnicity, and age and to obtain a variety of occupational, educational, and personal backgrounds on the Board in order to provide a range of viewpoints and perspectives. As a whole, we believe that the Board should possess a combination of skills, professional experience, and diversity of backgrounds necessary to oversee the Company’s business. Diversity of background includes racial and gender diversity. Twenty-fiveAs of our record date, forty percent of our independent directors are women or racially diverse individuals.
The Governance and& Nominating Committee also periodically evaluates the composition of the Board to assess the skills and experience that are currently represented on the Board, as well as the skills and experience that the Board will find valuable in the future, considering the Company’s current situation and strategic plans. We believe that this focus on finding qualified directors from diverse backgrounds has allowed the Company to assemble a Board comprised of directors of the highest caliber and with a wide range of viewpoints.
Nordson Corporation – 2020 Proxy Statement | | 21 |
Consideration of Director Candidates Recommended by Shareholders
Under its charter, the Governance and& Nominating Committee is responsible for vetting shareholder nominations of directors. The Committee does not have a formal policy with respect to the consideration of director candidates recommended by shareholders. However, its practice is to consider those candidates on the same basis and in the same manner as it considers recommendations from other sources. For more information on how a shareholder can recommend a candidate, see the “Questions and Answers About the Annual Meeting and These Proxy Materials” section of this proxy statement.
Code of Ethics and Business Conduct
We have a Code of Ethics and Business Conduct (the “Code”) that applies to all Nordson directors, officers, employees, and its subsidiaries, wherever located. Our Code contains the general guidelines and principles for conducting Nordson’s business consistent with the highest standards of business ethics. Our Code embodies our five guiding values, which form the foundation of our Company: Integrity, Excellence, Passion for Our Customers, Energy, and Respect for People. Our employees are expected to report all suspected violations of Company policies and the law, including incidents of harassment or discrimination. We will take appropriate steps to investigate all such reports and will take appropriate action. Under no circumstances will employees be subject to any disciplinary or retaliatory action for reporting, in good faith, a possible violation of our Code or applicable law or for cooperating in any investigation of a possible violation.
Board Leadership Structure
Our Governance Guidelines require us to have either an independent Chair of the Board or a presiding independent director if the Chair is not an independent director. The Governance Guidelines set forth the responsibilities of the Chair of the Board and the Presiding Director when the Chair of the Board is not an independent director. At present, the Chair of the Board position is separate from the Chief Executive Officer position. The Board’s role in risk oversight does not affect the Board’s leadership structure.
We believe that separating the Chair of the Board and Chief Executive Officer positions provides independent oversight of management while permitting our Chief Executive Officer Michael Hilton, to focus his time and energy on setting the strategic direction for the Company, overseeing daily operations, engaging with external constituents, developing and mentoring our future leaders, and promoting employee engagement at all levels of the organization. Our independent Chair of the Board Michael J. Merriman, Jr., leads the Board in the performance of its duties by establishing
agendas and ensuring appropriate meeting content (in collaboration with Mr. Hilton)our Chief Executive Officer), presiding during regularly held executive sessions with our independent directors, actively engaging with all independent directors and Mr. Hiltonour Chief Executive Officer between Board meetings, and providing overall guidance to Mr. Hiltonour Chief Executive Officer as to the Board’s views and perspectives, particularly on the strategic direction of the Company.
Meetings of the Board of Directors
The Board held twelveeight meetings during fiscal year 2018.2019. In addition, there were a total of eighteentwenty-two meetings of our committees. Nordson’s policy is to require attendance and active participation by directors at Board and committee meetings. EachIn 2019, each director attended at least 75% of the aggregate of (i) the total number of meetings of the Board held during the period for which he or she served as a director and (ii) the total number of meetings held by all committees on which he or she served (during the director served during fiscal year 2018.period that he or she served). Directors are encouraged to attend the Annual Meeting. All of Nordson’s directors then serving at the time attended the 20182019 Annual Meeting of Shareholders held on February 27, 2018.26, 2019.
Executive Sessions of Independent Directors
Pursuant to our Governance Guidelines, independent directors meet in regularly scheduled executive sessions without management. The Chair of the Board (or, when our Chair is not an independent director, the Presiding Director) chairs all regularly scheduled executive sessions of the Board, and also has authority to convene meetings of the independent directors at any time with appropriate notice.
| 22 | | Nordson Corporation – 2020 Proxy Statement |
Risk Oversight of Risk
The Board plays an active role, both as a whole and also at the committee level, in overseeing management of the Company’s risks. Management is responsible for the Company’sday-to-day risk management activities.activities and oversees areas of material risk, which may include operational, financial, legal and regulatory, human capital, information technology and security, and strategic and reputational risks. The Company has established an enterprise risk framework for identifying, aggregating, and evaluating risk across the enterprise. The risk framework is integrated with the Company’s annual planning, audit scoping, and control evaluation management by its internal auditor.
The involvement of the Board in assessing our business strategy at least annually is a key part of its oversight of risk management, its assessment of management’s appetite for risk, and its determination of what constitutes an appropriate level of risk for Nordson. The Board regularly receives updates from management and outside advisors regarding this oversight responsibility.
In addition, our Board committees each oversee certain aspects of risk management as presented below:
Audit Committee | Compensation Committee | Governance Committee | ||||||||||
Risks associated with financial matters, particularly financial reporting, accounting, disclosure, cybersecurity, and internal controls. | Risks associated with the establishment and administration of executive compensation and equity-based compensation programs and performance management of officers.
| Risks associated with Board independence, effectiveness and organization, corporate governance matters, and director succession planning.
| ||||||||||
Senior management attends Board and Board committee meetings at the invitation of the Board or its committees and is available to address any questions or concerns raised by the Board on risk management and any other matters.
The Audit and Compensation Committees rely also on the advice and counsel of our independent auditors and independent compensation consultant, respectively, to raise awareness of any risk issues that may arise during their regular reviews of our financial statements, audit work, and executive compensation policies and practices. The Board is updated on each committee’s risk oversight and other activities via meeting reports from each committee chair to the full Board.Board at each Board meeting.
|
Review of Transactions with Related Persons
The Board has adopted a written policy regarding the review and approval of transactions between the Company and its subsidiaries and certain persons that are required to be disclosed in proxy statements, which are commonly referred to as “related persons transactions.” Related persons include our directors, nominees for election as a director, persons controlling over 5% of our common shares, executive officers, and the immediate family members of each of these individuals. Under the written policy, Nordson’s Audit Committee is responsible for reviewing any related persons transactions and will consider factors it deems appropriate, including but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction. To the extent any member of the Audit Committee is involved in any transaction under review, such member recuses themselves.
Nordson Corporation – 2020 Proxy Statement | | 23 |
We have a monitoring and reporting program with respect to transactions with products supplied by, or to, a company which may employ a director or which may have a director serving on its board, to ensure the avoidance of any conflicts of interest resulting from our relationship. This program includes all such transactions collectively over $120,000 in one annual period. Under the program, we reviewed transactions with all companies which employ a director or have one of our directors serving as a member of its board. The review determined that any related persons transactions were neither material nor significant to either Nordson or the respective director’s company.company based on our written policy and the guidelines set forth in Item 404(a) of RegulationS-K under the Securities Exchange Act of 1934, as amended. All such transactions were conducted at arms-length. Information on the related persons transaction review is set forth under the caption “Director Independence” above.
The Board’s Role in Talent Development
A primary Board responsibility is to ensure that we have the appropriate management talent to successfully execute our strategies. Our Board believes that effective talent development is critical to Nordson’s continued success. Our Board’s involvement in leadership development and succession planning is systematic and ongoing. The Board plans for CEO succession and oversees management’s planning for succession of other key executive positions. Our Board calendar includes at least one meeting each year during which the Board conducts a detailed review of the Company’s talent strategies, leadership pipeline, and succession plans for key executive positions. The Compensation Committee oversees the process of succession planning and implements programs to retain and motivate key talent. To assist the Board, the CEO annually provides the Board with anin-depth assessment of senior managers and their potential to succeed to the position of CEO or other key executive positions.
Self-Assessments
On a regular basis, the Board conducts a self-assessment of the Board as a whole to determine, among other matters, whether the Board is functioning effectively. The independent directors also undertake a peer assessment of other independent directors as part of this self-assessment process. Each committee of the Board also conducts a self-assessment of the committee’s effectiveness. The Board considers this process to be the primary means of determining whether incumbent directors continue to demonstrate the attributes that should be reflected on the Board, or whether changes to membership are appropriate.
| Nordson Corporation – |
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has three standing committees – Audit Committee, Compensation Committee, and Governance and& Nominating Committee – and an Executive Committee. Respective committee functions, memberships and number of meetings held during fiscal year 20182019 are listed below. All members of the Audit Committee, Compensation Committee, and Governance and& Nominating Committee are independent under the independence standards of Nasdaq and our Governance Guidelines. A more detailed discussion of the purposes, duties, and responsibilities of the committees is found in the respective committee charters which are available at:www.nordson.com/en/our-company/corporate-governance.
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|
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|
|
| ||||
| ||||||
AUDIT |
COMPENSATION |
GOVERNANCE & NOMINATING | ||||||
Function |
Function |
Function | ||||||
• Reviewing the proposed audits (including both independent and internal audits) for each fiscal year, the results of these audits, and the adequacy of our systems of internal accounting control;
• Appointing, compensating, and overseeing the independent auditors for each fiscal year;
• Establishing procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters; and
• Reviewing and approving all related-persons transactions.
• Providing oversight of cyber security risks. |
• Reviewing and approving compensation for our executive officers;
• Administering the incentive and equity participation plans under which we compensate our executive officers;
• Providing oversight to executive talent and management succession planning, other than chief executive officer succession, which is a responsibility of the entire Board; and
• Overseeing the strong links between executive compensation and performance of our business by (i) holding executive sessions (without management present) at every regularly scheduled committee meeting; (ii) engaging an independent compensation consultant to advise on executive compensation issues, including peer benchmarking data; (iii) examining peer group compensation structures, goals, and financial performance; and (iv) basing incentive/variable pay on the achievement of financial and operating performance goals to foster alignment with shareholder interests.
|
• Assisting the Board by identifying individuals qualified to serve as directors, and to recommend to the Board the director nominees for each annual meeting of shareholders;
• Reviewing and recommending to the Board qualifications for committee membership and committee structure and operations;
• Recommending to the Board directors to serve on each committee and a chair for such committee;
• Developing and recommending to the Board a set of corporate governance policies and procedures;
• Developing, administering, and overseeing the self-assessment process for the Board and its committees;
• Overseeing management’s development of an orientation program for new directors; and
• Reviewing Director’s compensation. | ||||||
Members |
Members |
Members | ||||||
Frank M. Jaehnert* Randolph W. Carson Arthur L. George Jr. Joseph P. Keithley |
Mary G. Puma* Lee C. Banks Michael J. Merriman Jr. Victor L. Richey
|
Victor L. Richey* Randolph W. Carson Joseph P. Keithley Mary J. Puma | ||||||
Meetings |
Meetings |
Meetings | ||||||
9 |
5 |
8 |
|
|
| |||||
|
| |||||
| * | Committee chair |
|
The Board has designated Mr. Jaehnert, who is an independent director under the Nasdaq listing standings and the SEC’s audit committee requirements, as an “audit committee financial expert” pursuant to the SEC’s final rules implementing Section 407 of the Sarbanes-Oxley Act. Shareholders should understand that the designation of Mr. Jaehnert as an “audit committee financial expert” is an SEC disclosure requirement and that it does not impose upon him any duties, obligations, or liabilities that are greater than those imposed on him as members of the Audit Committee and the Board in the absence of such designation.
The Audit Committee has confirmed Ernst & Young LLP’s independence from management and the Company, including compatibility ofnon-audit services with the auditors’ independence. The Audit Committee Report to the Board is at page 7884 of this Proxy Statement.
Director Compensation
Nordson Corporation – 2020 Proxy Statement | | 25 |
DIRECTOR COMPENSATION
Objectives of Director Compensation
Qualitynon-employee directors are critical to our success. We believe that the two primary duties ofnon-employee directors are (1) to effectively represent the long-term interests of our shareholders and (2) to provide guidance to management. As such, our compensation program fornon-employee directors is designed to meet several key objectives:
Adequately compensate directors for their responsibilities and time commitments and for the personal liabilities and risks that they face as directors of a public company;
Attract the highest calibernon-employee directors by offering a compensation program consistent with those at companies of similar size, complexity, and business character;
Align the interests of directors with our shareholders by providing a significant portion of compensation in equity and requiring directors to own our stock;
Provide compensation that is simple and transparent to shareholders and reflects corporate governance best practices; and
Where possible, provide flexibility in the form and timing of payments.
Elements of Director Compensation
We believe that the following components of our director compensation program support the objectives above:
We provide cash compensation through retainers for boardBoard and committee service, as well as additional cash retainers to the Chair of the Board and chairs of our standing Board committees.
We do not provide Board and committee meeting fees. Compensating our directors in this manner simplifies the administration of our program and creates greater equality in rewarding service on committees of the Board. The additional retainers compensate directors for the additional responsibilities and time commitments involved with chair responsibilities.
|
All of thenon-employee directors receive annual awards of restricted share units which vest 100% on the last day of the fiscal year.
As a practice, we do not grant securities to address any decrease in the market value of equity securities granted as compensation or held, directly or indirectly, by any officer, director, or other employee.
We pay for, provide, or reimburse directors for expenses incurred to attend Board and committee meetings and director education programs.
Directors do not have a retirement plan but are afforded business travel and accident insurance coverage.
Determining Director Compensation. The Governance and& Nominating Committee of the Board provides oversight on director compensation. The Committee oversees, reviews, and reports to the Board on director compensation. The Committee annually reviews competitive market data fornon-employee director compensation and makes recommendations to the Board of Directors for its approval. The Committee is assisted in performing its duties by Exequity LLP (“Exequity”), the Compensation Committee’s independent compensation consultant.
Exequity’s review for fiscal year 20182019 consisted of an analysis of competitive market data from a selected peer group of companies. The peer group is consistent with the peer group Exequity used for the executive compensation review conducted during fiscal year 2018.2019.
| 26 | | Nordson Corporation – 2020 Proxy Statement |
The components and respective amounts ofnon-employee director compensation for fiscal year 20182019 were:
| ||||||
| ANNUAL CHAIR COMPENSATION | |||||
| Chair of the Board | $75,000 | ||||
Audit Committee Chair | $15,000 | |||||
Compensation Committee Chair | $12,500 | |||||
Governance & Nominating Committee Chair | ||||||
| $10,000
| |||||
| (1) | The number of restricted share units granted is determined by the closing share price on the date of grant. |
Annual Cash Retainer. The cash retainers are paid in equal quarterly installments. ForGenerally, for directors who join the Board after the commencement of a fiscal year, the annual retainer is prorated based on the number of months remaining in the fiscal year. Due to Committee membership changes during fiscal year 2018, the director cash retainers for Messrs. Jaehnert, Keithley, and Merriman were prorated.
Annual Equity Award. Restricted share unit awards are granted annually and are effective the first business day of the fiscal year. The awards vest 100% on the last day of the fiscal year. If a director retires from the Board prior to the vesting date, restricted share units are forfeited on apro-rata basis, based on the number of months served prior to retirement. If a director is elected by the Board or shareholders after the commencement of a fiscal year, generally, the restricted share unit award is prorated based on the number of months remaining in the fiscal year. If restricted share units are not deferred, then the units and accrued dividend equivalents convert to Nordson common shares on aone-for-one basis on the vesting date.
Deferred Compensation Program. Under the directors deferred compensation plan,non-employee directors may defer all or a portion of their annual cash retainer into anon-qualified, unfunded deferred compensation account in the form of deferred cash or share equivalent units. Amounts deferred (i) as cash will earn a return based on the10-year Treasury bill constant maturity interest rate, or (ii) as share equivalent units will earn a return based on our common share price and accrued dividend equivalents. We do not pay above market or preferential interest rates under this deferred compensation plan.
|
Directors may elect to defer the receipt of restricted share units prior to the grant date. If receipt is deferred, the restricted share units and accrued dividend equivalents will convert to share equivalent units on aone-for-one basis on the vesting date and are not subject to forfeiture.
After retirement from our Board, the share equivalent units and any cash retainers that were deferred as share equivalent units are paid out in our common shares in predetermined quarterly installments over a four-year period. Any cash retainers that were deferred as cash, and accrued interest thereon, will be paid out in cash in predetermined quarterly installments over a four-year period.
Share Ownership Guidelines. The Board believes that ournon-employee directors should have a meaningful ownership interest in the Company and has implemented share ownership guidelines for ournon-employee directors. The ownership guidelines requirenon-employee directors to own a minimum of five times their annual cash retainer in common shares. Shares held in the form of share equivalent units or restricted share units qualify as shares owned under the guidelines. Newly elected directors have five years within which to achieve the share ownership requirement. Allnon-employee directors, except for Ms. Jones, currently meet the guideline.guidelines. Ms. Jones was elected November 26, 2019 and has five years to achieve her ownership requirement, per the governance guidelines.
Nordson Corporation – 2020 Proxy Statement | | 27 |
Charitable Gifts Matching Program. Current and retirednon-employee directors may participate in our charitable matching gift program that is available to all current and retired employees. Directors Banks, George, Jaehnert, Keithley, Puma, and Richey, Jr. participated in this program in fiscal year 2018.2019. During fiscal year 2018,2019, we made matching contributions totaling $49,500$56,750 under this program.
Indemnity Agreements. We have indemnification agreements for directors in order to attract and retain highly qualified candidates to serve as our directors. The indemnification agreements are intended to secure the protection for our directors contemplated by our Regulations and to the full extent permitted by Ohio law.
Director Compensation Table for Fiscal Year 20182019
The following table sets forth the total compensation of eachnon-employee director for services provided as a director for 2019. Ms. Jones did not receive any compensation during 2019 because she was appointed to our Board after the 2019 fiscal year 2018. Due to Committee membership changes the director fees for Messrs. Jaehnert, Keithley, and Merriman were prorated.ended.
| Name | Fees Earned or Paid in Cash ($) | Stock Awards (1) ($) | All Other Compensation (2) ($) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards (1) ($) | All Other Compensation (2) ($) | Total ($) | ||||||||
Lee C. Banks
|
75,000
|
125,000
|
11,293
|
211,293
| 80,000 | 130,000 | 11,523 | 221,523 | ||||||||
Randolph W. Carson
|
75,000
|
125,000
|
21,077
|
221,077
| 80,000 | 130,000 | 25,972 | 235,972 | ||||||||
Arthur L. George, Jr.
|
75,000
|
125,000
|
18,110
|
218,110
| 80,000 | 130,000 | 20,489 | 230,489 | ||||||||
Frank M. Jaehnert
|
85,112
|
125,000
|
11,238
|
221,350
| 95,000 | 130,000 | 7,830 | 232,830 | ||||||||
Joseph P. Keithley
|
94,551
|
125,000
|
69,724
|
289,275
| 80,000 | 130,000 | 80,230 | 290,230 | ||||||||
Michael J. Merriman, Jr. (3)
|
120,337
|
125,000
|
42,669
|
288,006
| 155,000 | 130,000 | 47,894 | 332,894 | ||||||||
Mary G. Puma
|
85,000
|
125,000
|
9,363
|
219,363
| 92,500 | 130,000 | 20,070 | 242,570 | ||||||||
Victor L. Richey, Jr.
|
83,000
|
125,000
|
24,333
|
232,333
| 90,000 | 130,000 | 30,913 | 250,913 |
| (1) | This column represents the grant date fair value of the restricted share unit awards as calculated under FASB ASC Topic 718 and do not reflect whether the recipient has actually received a financial gain from these awards. The assumptions made in valuing share awards reported in this column for |
| (2) | This column includes the value of dividends on restricted shares, restricted share units, and share equivalent units, premiums for business travel accident insurance, and matching charitable gifts made during |
| (3) | Mr. Merriman participates in our company-sponsored health care plan under a legacy program which affords health care coverage to anon-employee director on the same terms as our employees. We imputed |
| Nordson Corporation – |
PROPOSAL 2: RATIFY THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Appointment of Independent Registered Public Accounting Firm for Fiscal Year Ending October 31, 20192020
Ernst & Young LLP served as our independent registered public accounting firm for the fiscal year ended October 31, 2018.2019. The Audit Committee has appointed Ernst & Young LLP to serve as our auditors for the fiscal year ending October 31, 2019.2020. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate shareholder questions. Although ratification of the appointment of the independent auditors is not required by law, the Audit Committee and the Board of Directors believe that shareholders should be given the opportunity to express their views on the subject. While not binding on the Audit Committee or the Board of Directors, the failure of the shareholders to ratify the appointment of Ernst & Young LLP as our independent auditors would be considered by the Board of Directors in determining whether or not to continue the engagement of Ernst & Young LLP. Ultimately, the Audit Committee retains full discretion and will make all determinations with respect to the appointment of independent auditors, whether or not our shareholders ratify the appointment.
As provided in the Audit Committee’s charter, the Audit Committee is responsible for directly appointing, retaining, terminating, and overseeing our independent registered public accounting firm. Our Audit Committee continuously evaluates the independence and effectiveness of Ernst & Young LLP and its personnel, and the cost and quality of its audit and audit-related services.
Pre-Approval of Audit andNon-Audit Services
At the start of each fiscal year, our Audit Committeepre-approves the audit services and audit-related services, if any, together with specific details regarding such services anticipated being required for such fiscal year including, as available, estimated fees. The Audit Committee reviews the services provided to date and actual fees against the estimates and such fee amounts may be updated for presentation at the regularly scheduled meetings of the Audit Committee. Additionalpre-approval is required before actual fees for any service can exceed the originallypre-approved amount. The Audit Committee may also revise the list ofpre-approved services and related fees from time to time. All of the services described below under the captions “Audit Fees” and “Audit-Related Fees” with respect to fiscal years 20172018 and 20182019 were approved in accordance with this policy.
If we seek to engage our independent registered public accounting firm for other services that are not considered subject to general approval as described above, then the Audit Committee must approve such specific engagement as well as the estimated fees. Such engagement will be presented to the Audit Committee for approval at its next regularly scheduled meeting. If the timing of the project requires an expedited decision, then we may ask the chair of the Audit Committee to approve such engagement. Any such approval by the chair is then reported to the full Audit Committee for ratification at the next Audit Committee meeting. In any event, approval of any engagement by the Audit Committee or the chair of the Audit Committee is required before our independent registered public accounting firm may commence any engagement. Additional approval is required before any fees can exceed approved fees for any such specifically-approved services.
Nordson Corporation – | | |
Fees Paid to Ernst & Young LLP
The following table shows the fees we paid or accrued for audit and other services provided by Ernst & Young LLP for the fiscal years ended October 31, 20182019 and October 31, 2017:2018:
Services
|
Fiscal Year 2018
|
Fiscal Year 2017
| Fiscal Year 2019 | Fiscal Year 2018 | ||||||||
Audit Fees (1)
|
$2,204,684
| $1,919,363 | $ | 2,037,900 | $ | 2,204,684 | ||||||
Audit-Related Fees (2)
|
$ 18,000
|
$ 240,000
| $ | — | $ | 18,000 | ||||||
Other Fees
|
$ —
|
$ —
| $ | — | $ | — | ||||||
Total Fees | $ | 2,037,900 | 2,222,684 | |||||||||
| (1) | Audit services of Ernst & Young LLP consisted of the audit of our annual consolidated financial statements, the quarterly review of interim financial statements, the audit of internal control over financial reporting, and statutory audits required internationally. |
| (2) | Audit-Related Fees generally include fees for employee benefit plans, business acquisitions, accounting consultations, and services related to SEC registration statements. |
RECOMMENDATION REGARDING PROPOSAL 2:
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
“FOR” RATIFICATION OF THE
AUDIT COMMITTEE’S APPOINTMENT OF ERNST
The Board of Directors recommends that
you vote “FOR” ratification of the Audit Committee’s
appointment of Ernst & YOUNGYoung LLP AS OUR INDEPENDENTas our independent
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDINGregistered public accounting firm for the fiscal year ending
OCTOBEROctober 31, 2019.2020.
| Nordson Corporation – |
SECURITY OWNERSHIP OF NORDSON COMMON SHARES BY DIRECTORS, DIRECTOR
NOMINEES, EXECUTIVE OFFICERS, AND LARGE BENEFICIAL OWNERS
The following table sets forth the number and percentage of issued and outstanding Nordson common shares beneficially owned as of January 2, 20192020 by directors, director nominees, each named executive officer, and all directors and executive officers as a group. There were 57,609,58857,740,521 shares of common stock outstanding as of January 2, 2019.2020. The business address for matters related to Nordson for each of our directors, director nominees, and executive officers is 28601 Clemens Road, Westlake, Ohio, 44145.
This beneficial ownership information is based on information furnished by the directors, director nominees, and named executive officers. Beneficial ownership is determined in accordance with Rule13d-3 under the Exchange Act for purposes of this Proxy Statement and is not necessarily to be construed as beneficial ownership for other purposes.
| Name of Beneficial Owner | Total of Shares | Percent of Outstanding Shares | Direct Ownership (1) | Employee Plan (2) | Right to Acquire (3) | Restricted Share Units and Share Equivalent Units (4) | ||||||||||||||||
Lee C. Banks
|
|
14,735
|
|
*
|
|
14,735
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||
Randolph W. Carson
|
|
26,786
|
|
*
|
|
12,093
|
|
|
—
|
|
|
—
|
|
|
14,693
|
| ||||||
Arthur L. George, Jr.
|
|
11,823
|
|
*
|
|
4,536
|
|
|
—
|
|
|
—
|
|
|
7,287
|
| ||||||
Frank M. Jaehnert
|
|
13,773
|
|
*
|
|
12,209
|
|
|
—
|
|
|
—
|
|
|
1,564
|
| ||||||
Joseph P. Keithley
|
|
48,010
|
|
*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,010
|
| ||||||
Michael J. Merriman, Jr.
|
|
22,555
|
|
*
|
|
2,701
|
|
|
—
|
|
|
—
|
|
|
19,854
|
| ||||||
Mary G. Puma
|
|
18,829
|
|
*
|
|
16,359
|
|
|
—
|
|
|
—
|
|
|
2,470
|
| ||||||
Victor L. Richey, Jr.
|
|
13,501
|
|
*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,501
|
| ||||||
Michael F. Hilton
|
|
401,350
|
|
*
|
|
24,131
|
|
|
—
|
|
|
233,550
|
|
|
143,669
|
| ||||||
Gregory A. Thaxton
|
|
130,171
|
|
*
|
|
10,899
|
|
|
8,646
|
|
|
81,625
|
|
|
29,001
|
| ||||||
John J. Keane
|
|
127,150
|
|
*
|
|
23,469
|
|
|
897
|
|
|
90,925
|
|
|
11,859
|
| ||||||
Gregory P. Merk
|
|
105,495
|
|
*
|
|
41,370
|
|
|
367
|
|
|
59,800
|
|
|
3,958
|
| ||||||
Jeffrey A. Pembroke
|
|
22,434
|
|
*
|
|
4,544
|
|
|
140
|
|
|
17,750
|
|
|
—
|
| ||||||
Directors, director nominees, and executive officers as a Group (18 persons)
|
|
1,133,365
|
|
1.97%
|
|
215,631
|
|
|
13,616
|
|
|
591,290
|
|
|
312,828
|
| ||||||
| Name of Beneficial Owner
| Total Number of Shares
| Percent of
| Direct
| Employee Plan(2)
| Right to Acquire(3)
| Restricted Share Units and Share Equivalent Units(4)
| ||||||||||||||||||||||||
Lee C. Banks, Director
|
|
15,771
|
|
|
*
|
|
|
15,771
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||
Randolph W. Carson, Director
|
|
27,981
|
|
|
*
|
|
|
13,129
|
|
|
—
|
|
|
—
|
|
|
14,852
|
| ||||||||||||
Arthur L. George, Jr., Director
|
|
8,403
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,403
|
| ||||||||||||
Frank M. Jaehnert, Director
|
|
14,826
|
|
|
*
|
|
|
12,209
|
|
|
—
|
|
|
—
|
|
|
2,617
|
| ||||||||||||
Ginger M. Jones, Director
|
|
1,000
|
|
|
*
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||
Joseph P. Keithley, Director
|
|
49,563
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,563
|
| ||||||||||||
Michael J. Merriman, Jr., Chair of the Board
|
|
23,807
|
|
|
*
|
|
|
2,701
|
|
|
—
|
|
|
—
|
|
|
21,106
|
| ||||||||||||
Mary G. Puma, Director
|
|
18,893
|
|
|
*
|
|
|
16,397
|
|
|
—
|
|
|
—
|
|
|
2,496
|
| ||||||||||||
Victor L. Richey, Jr., Director
|
|
14,684
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,684
|
| ||||||||||||
Sundaram Nagarajan,
|
|
7,097
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,097
|
| ||||||||||||
Gregory A. Thaxton, Executive Vice President and Chief Financial Officer
|
|
134,368
|
|
|
*
|
|
|
9,357
|
|
|
8,710
|
|
|
84,100
|
|
|
32,202
|
| ||||||||||||
John J. Keane, Executive Vice President
|
|
105,916
|
|
|
*
|
|
|
29,268
|
|
|
908
|
|
|
60,875
|
|
|
14,866
|
| ||||||||||||
Gregory P. Merk, Executive Vice President
|
|
110,227
|
|
|
*
|
|
|
39,289
|
|
|
369
|
|
|
56,100
|
|
|
14,469
|
| ||||||||||||
Jeffrey A. Pembroke,
|
|
39,900
|
|
|
*
|
|
|
7,369
|
|
|
141
|
|
|
22,150
|
|
|
10,241
|
| ||||||||||||
Michael F. Hilton, Former President and Chief Executive Officer, and Former Director
|
|
403,322
|
|
|
*
|
|
|
7,387
|
|
|
—
|
|
|
250,650
|
|
|
145,285
|
| ||||||||||||
Directors, director nominees, and executive officers as a Group (20 persons)
|
|
1,158,487
|
|
|
2.01
|
%
|
|
199,506
|
|
|
13,788
|
|
|
320,185
|
|
|
221,686
|
| ||||||||||||
| * | Less than 1% |
Nordson Corporation – 2020 Proxy Statement | | 31 |
| (1) | Except as otherwise stated, beneficial ownership of the shares held by each of the directors, director nominees, and executive officers consists of sole voting power and/or sole investment power, or of voting power and investment power that is shared with the spouse of the director, director nominee, or executive officer. |
| (2) | This column shows indirect shares held in our Employee Stock Ownership Plan and 401(k) Plan, for which the individuals indicated have sole voting power and limited investment power. |
| (3) | This column shows shares covered by stock options that currently are exercisable or will be exercisable by March 1, |
| (4) | This column shows the direct share unit ownership held by directors and director nominees, either as deferred ornon-deferred, and executive officers under the deferred compensation plans described in this Proxy Statement. |
|
Five Percent Beneficial Owners
The following table lists each person we know to be an owner of more than 5% of our common shares as of January 2, 2019.2020.
| Beneficial Owner | Total Number of Shares | Percent of Outstanding Shares | ||||||||
The Vanguard Group, Inc. (1)
|
|
4,560,618
|
|
|
7.9
|
%
| ||||
BlackRock, Inc. (2)
|
|
4,311,022
|
|
|
7.5
|
%
| ||||
Jennifer A. Savage (3)
|
|
4,038,708
|
|
|
7.0
|
%
| ||||
Jane B. Nord (4)
|
|
3,272,213
|
|
|
5.7
|
%
| ||||
Beneficial Owner | Total Number of Shares | Percent of Outstanding Shares | ||||||||
The Vanguard Group, Inc.(1)
|
|
4,962,966
|
|
|
8.6
|
%
| ||||
BlackRock, Inc.(2)
|
|
4,705,381
|
|
|
8.1
|
%
| ||||
Massachusetts Financial Services Company(3)
|
|
4,423,478
|
|
|
7.6
|
%
| ||||
Jennifer A. Savage(4)
|
|
4,034,537
|
|
|
7.0
|
%
| ||||
| (1) | The information set forth is based solely on the Schedule 13G/A filed February |
| (2) | The information set forth is based solely on the Schedule 13G/A filed |
| (3) | The information set forth is based solely on the Schedule 13G filed |
| (4) | The information set forth is based solely on the Schedule 13G/A filed January 22, 2019 with the SEC by Jennifer A. Savage, an individual, c/o Schneider Smeltz Spieth Bell LLP, 1375 East 9th Street, Suite 900, Cleveland, OH 44114, wherein she reported beneficial ownership of |
|
We are party to an agreement that, with some exceptions, gives us a right of first refusal with respect to proposed sales of our common shares by certain members of the Nord family and The Nord Family Foundation.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Exchange Act requires our directors, executive officers, and beneficial owners of more than ten percent of our outstanding common shares to file reports of beneficial ownership and changes in beneficial ownership with the SEC, and to furnish copies of those reports to us. To our knowledge, based solely on a review of the Forms 3, 4, and 5 and amendments thereto with respect to fiscal year ended October 31, 2018,2019, we believe that for the year 20182019 all filing requirements were met on a timely basis.
| Nordson Corporation – |
PROPOSAL 3: ADVISORY VOTE TO APPROVE
THE COMPENSATION OF OUR NAMED
EXECUTIVE OFFICERS
During our 20182019 Annual Meeting, we asked our shareholders to approve the compensation of our named executive officers, commonly referred to as a“Say-on-Pay” vote. Approximately 97.7%97.95% of shareholder votes cast were in favor of our executive officer compensation program. We value the positive endorsement by our shareholders of our executive compensation policies and believe that the outcome signals our shareholders’ support of our executive compensation program. As a result, our Compensation Committee decided to retain our general approach to named executive officer compensation, with an emphasis on performance-based short and long-term incentive compensation that rewards our most senior executives when they deliver value for our long-term shareholders. At our 2017 Annual Meeting, our shareholders voted in favor of holding our“Say-on-Pay” vote annually, which our Board subsequently approved. Our next shareholder vote on the frequency of our“Say-on-Pay” vote is expected to be held at our 2023 Annual Meeting.
Nordson’s consistent long-term shareholder value creation is attributed to a rigorously-applied management process implemented over the years by successive teams of talented and committed executives. Our executive compensation program underpins and reinforces this process and the performance it generates. We believe the program strikes the appropriate balance between utilizing responsible, measured pay practices and effectively incentivizing our executives to dedicate themselves fully to creating value for our shareholders. In support of this belief, and reflective of the Compensation Committee’s diligent oversight of the executive compensation program, the Compensation Committee urges you to consider the following factors:
WHAT WE DO | ||||
| Pay-for-Performance. A significant portion of executive pay is | |||
|
| |||
| Independent Compensation Consultant. The Compensation Committee engages an independent compensation consultant, Exequity LLP. | |||
| ||||
✓Peer Group Benchmarking. We review annually our compensation peer group and make adjustments as needed. | ||||
| Balanced Compensation Structure. We utilize a balanced approach to compensation, which combines fixed and variable, short-term and long-term, and cash and equity compensation. | |||
|
| |||
| Responsibly Administered Incentive Compensation Programs. We have diversified incentive compensation goals without steep payout cliffs. Vesting periods for annual equity awards encourage consistent behavior and reward long-term, sustained performance. | |||
| Certify Performance. The Compensation Committee certifies performance based uponpre-established financial and operating measures before any incentive award payouts are made. | |||
| Capped Award Payouts. Cash payments that can be earned under the Annual Cash Incentive Award, as well as shares under the longer-term Performance Share Incentive Award, are capped. | |||
| Consistent Equity Award Policy. Equity awards are generally made on a consistent schedule (with exceptions for newly hired executives) and are not made in anticipation of significant developments that may impact the price of our common shares. Similarly, we do not time the release of material,non-public information based on equity award dates. | |||
| |||
| ||||
|
| |||
|
| |||
|
| |||
| Talent Management. We engage in an ongoing, rigorous review of executive talent and succession plans for key operating and corporate roles. | |||
Nordson Corporation – 2020 Proxy Statement | | 33 |
| WHAT WE DO NOT DO | ||||
| ×No Significant Perquisites. The | |||
| ×No Above-Market or Preferential Earnings. We do not pay above-market or preferential earnings onnon-qualified deferred compensation. | |||
| ×No Hedging, Pledging or Short Sales Transactions Permitted. We prohibit directors and executive officers from pledging Nordson common shares as | |||
| ×NoChange-in-Control Severance TaxGross-Ups.For executive officers elected after November 1, 2015, we have eliminated tax gross up on any severance benefits. | |||
× No Single-Trigger forChange-in-Control Severance Payments. Cash severance payments for our executive officers require a “double-trigger” — achange-in-control and involuntary termination without cause within two years following achange-in-control — and equity awards granted after December 27, 2017 under our Amended and Restated 2012 Stock Incentive and Award Plan (the “Plan) also provide for “double-trigger” vesting. | ||||
× No Dividends or Dividend Equivalents on Unearned Performance Share Units. Performance share awards do not earn or pay dividends until the shares are earned, and for awards granted after December 27, 2017, dividends and dividend equivalents on time based awards are required to be deferred until vesting of the underlying awards. | ||||
× No Excessive Dilution. We review ongoing awards, forfeitures, overhang levels (dilutive impact of equity compensation on our shareholders), and annual run rates (the aggregate shares awarded as a percentage of total outstanding shares). | ||||
× No Share Repricing. We prohibit repricing of underwater stock options and other awards without shareholder approval. | ||||
× No Automatic Vesting.We require a minimum vesting period of at least one year for all types of awards granted under the Plan, with an exception for awards covering up to 5% of the Plan’s share reserve. | ||||
We urgeencourage you to read the “Executive Compensation: Compensation“Compensation Discussion and Analysis” of the Proxy Statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives. Also, we encourage you to review the Summary Compensation Table and related compensation tables and narrative of this Proxy Statement, which provide detailed information on the compensation of our named executive officers.
We are asking our shareholders to indicate their support for compensation paid to our named executive officers as described in this Proxy Statement by voting “FOR” the following resolution at the 20192020 Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of our named executive officers, as disclosed in the Company’s Proxy Statement for the 20192020 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the executive compensation tables, and related narrative.”
This advisory resolution, commonly referred to as a“Say-on-Pay” resolution, is being presented to our shareholders for a vote pursuant to Section 14A of the Exchange Act and isnon-binding on the Board. Althoughnon-binding, the Board and the Compensation Committee will carefully review and consider the voting results when evaluating our executive compensation program.
RECOMMENDATION REGARDING PROPOSAL 3:
THE BOARD OF DIRECTORS RECOMMENDS THAT, ON AN ADVISORY BASIS, YOU VOTE
The Board of Directors recommends that,
on an advisory basis,
you vote“FOR” THE APPROVAL OF the approval of
THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.the compensation of our named executive officers.
34 | | Nordson Corporation – |
COMPENSATION DISCUSSION AND ANALYSIS
All references in this Compensation Discussion and Analysis section of the Proxy Statement to “year” or “years” are references to fiscal years unless otherwise noted. Our fiscal year ends October 31.
This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation philosophy, and program, theour compensation decisions made under this program,decision process, and the specific factors we considered in making those decisions. This CD&A focuses on theelements of our executive compensation ofprogram for our named executive officers for 2018:2019. They are:
Sundaram Nagarajan |
| |
Gregory A. Thaxton | Executive Vice President, Chief Financial Officer | |
John J. Keane | Executive Vice President | |
Gregory P. Merk | Executive Vice President | |
Jeffrey A. Pembroke | Executive Vice President | |
Michael F. Hilton | Senior Advisor, Former President and Chief Executive Officer | |
|
| |
|
| |
|
| |
|
| |
This CD&A is presented in five parts:
Part I: Executive Summary. In this section we discuss: (a) highlightsAs part of our financialnormal succession planning process and operating performance that supported, in part, compensation awarded toas a result of a robust search, the Board of Directors appointed Mr. Nagarajan as our named executive officers for 2018; (b) our compensation objectives, including ourpay-for-performance philosophy; (c)President and Chief Executive Officer, effective August 1, 2019. On the same day, Mr. Hilton’s compensation for 2018;Hilton ceased as President and (d) how compensation was tied to performance.
Part II: SettingChief Executive Compensation. In this section we explain our processesOfficer and procedures and the roles the Compensation Committee, management, and the Compensation Committee’s independent compensation consultant have in setting our executive compensation program.
Part III: Key Components of Our Executive Compensation Program. In this section we provide details of the key components of the compensation we pay to our named executive officers, including base salary, annual cash incentive award, long-term incentive award, and other equity-based awards. We also discuss and analyze actions taken with respect to these components in 2018.
Part IV: Other Components of Our Executive Compensation Program. In this section we provide details of other components of the compensation we provide to our named executive officers, including perquisites, welfare and retirement benefits, andchange-in-control benefits.
Part V: Policies Related to Executive Compensation. In this section we review the policies we have adopted that relate to our executive compensation program, including our equity award practices, clawback policy, prohibition against pledging shares or engaging in the hedging of Nordson common shares, and shareholder ownership guidelines for executive officers.
In this CD&A we use the terms “the Committee,” “we,” “us,” and “our” interchangeably in referencebecame Senior Advisor to the Company. Unless otherwise stated, all references in this Compensation Committee, orDiscussion and Analysis to CEO Compensation for 2019 reflect Mr. Nagarajan’s compensation (annualized where noted) because he was our Chief Executive Officer on October 31, 2019.
On December 12, 2019, we announced Mr. Thaxton’s plans to retire in 2020, with the proper context, Nordson Corporation.last 12 years as our Chief Financial Officer. We have initiated a search of internal and external candidates for his successor. Mr. Thaxton will remain in his current role throughout this transition period.
This CD&A contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from the results, performance or achievements expressed or implied thereby. For a detailed discussion of these risks, see Part I, Item 1A. “Risk Factors” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 20182019 Annual Report. Shareholders should note that statements contained in this CD&A regarding our company and business group performance targets and goals should not be interpreted as management’s expectations, estimates of results or other guidance.
Nordson Corporation – | | 35 |
2018 Financial Performance
Fiscal year 2018 was a year of strong financial performance. The tables below present FY2016 – FY2018 reported results forCD&A and the three primary drivers of incentive compensation for the named executive officers – Diluted Earnings per Share, Return on Total Capital, and Revenue. TheExecutive Compensation Committee elected to exclude any financial benefits the Company receivedTables are organized as a result of the Tax Cuts and Jobs Act that was passed in 2017. As a result, all calculations for executive compensation in this section, except for the graph below (see footnote), exclude the financial benefit to the Company as a result of the Tax Cuts and Jobs Act.follows:
| | |||
Section | Subject | Page | ||
Executive Summary | 37 | |||
37 | ||||
38 | ||||
• Shareholder Returns and 2019 Financial and Operating Highlights | 40 | |||
Discussion of our Compensation Program | 42 | |||
45 | ||||
46 | ||||
46 | ||||
49 | ||||
55 | ||||
59 | ||||
59 | ||||
59 | ||||
59 | ||||
60 | ||||
60 | ||||
61 | ||||
Compensation Tables and Explanatory Notes | 64 | |||
67 | ||||
70 | ||||
74 | ||||
77 | ||||
79 | ||||
Diluted Earnings per Share* Return on Total Capital* Revenue (Billions)
| ||
| 36 | | Nordson Corporation – 2020 Proxy Statement |
Executive Compensation ObjectivesPhilosophy
We provide a straightforward, uncomplicatedOur compensation structure for our named executive officers, one which isplans and programs are designed to supportdrive sustainable results and deliver long-term, superior shareholder returns. We design our executive compensation plans and programs based on three primary objectives:fundamental objectives that help us achieve those goals: (1) alignment with shareholder interests, (2) pay for performance, and (3) talent retention.
Objective | How Objective is Achieved | |
Alignment with Shareholder Interests | A
We impose share ownership requirements, which encourage our executives to maintain a meaningful equity interest in the Company. | |
| Our incentive awards are based on performance against a balanced mix of long-standing, consistent andpre-established financial measures, as well as quantitative operating performance measures. | |
Talent Retention | Total direct compensation opportunities generally are targeted to approximate the median of the peer group
The vesting periods for equity-based compensation (performance share units, stock options, and restricted shares) | |
Our compensation philosophy emphasizes a long-term view aligned with shareholder interests. Our long track record of sustained success is exemplified by the following:
| • | Annual average shareholder return is above market. Over the past 10 years, our annual shareholder return, including dividends, is 29.27%, compared to the average annual return for the S&P 500 of 14.33%. |
|
Mr. Hilton’s Compensation
The compensation paid to our Chief Executive Officer, Mr. Hilton, is consistent with our“pay-for-performance” compensation philosophy that applies to all of our named executive officers. Considering Mr. Hilton’s tenure, experience, and performance, his total target direct compensation approximates the 75th percentile of other chief executive officers in our peer group. Mr. Hilton’s actual annual and long-term incentive awards are aligned with our earnings per share growth, return on total capital, and revenue growth.
During its November 20, 2017 meeting, the Compensation Committee, with input from its independent executive compensation consultant, Exequity LLP, established Mr. Hilton’s 2018 total target direct compensation, taking into account a number of factors, including a competitive market review, tenure and experience, relative internal pay equity, the Board’s assessment of Mr. Hilton’s multi-year performance, and the Company’s overall financial and operating performance:
|
| |
| ||
| ||
|
| |
|
| |
|
|
The combination of target payout opportunityPay for the Annual Cash Incentive Award and Performance Share Incentive Award plus the grant date fair value of restricted share and stock option awards represented approximately 85% of Mr. Hilton’s target total direct compensation for 2018, which further reinforces ourpay-for-performance culture.
During its November 26, 2018 meeting, shortly after our 2018 fiscal year ended, the Board reviewed Mr. Hilton’s performance for 2018. In assessing Mr. Hilton’s performance, the Board considered Mr. Hilton’s impact on the Company’sone-year operating plan and longer-term strategic plans. The Board concluded that Mr. Hilton delivered outstanding performance with respect to both his short and long-term goals. In particular, the Board noted the following:
The Company’s strong financial and operating performance, including achieving multiple record financial metrics, and top percentile performance among the peer group companies;
Mr. Hilton’s leadership of the Company, specifically the progress made toward strengthening the Company’s overall long-term growth profile through organic initiatives, acquisitions, and driving continuous improvement through the global organization; and
Continued development and execution on senior leadership and management succession plans.
Based on the Board’s assessment and reflective of the performance noted above, the Compensation Committee, without Mr. Hilton present during its deliberations, and consistent with its“pay-for-performance” philosophy, took the following actions with respect to Mr. Hilton’s 2018 incentive compensation:
Incentive Award
|
Payout
|
Percent of Target
| ||
2018 Annual Cash Incentive | $1,082,250 | 117.0% | ||
2016-2018 Performance Share Incentive
| 34,095 shares(1)
| 185.3%
|
|
Except for excluding the financial benefits the Company received from the Tax Cuts and Jobs Act, no discretion was exercised by the Compensation Committee to increase or decrease the formulaic incentive award payouts to Mr. Hilton.
How Compensation Correlates to Performance
Our executive compensation program is structured so that a significant portion of the compensation paid to our named executive officers is dependent upon the performance of our business.Company’s performance. The program is not overly weighted toward cash incentive compensation and does not otherwise have the potential to threaten long-term shareholder value by promoting unnecessary or excessive risk-taking by our executive officers.
For incentive compensation awards that are based on the Company’s performance, our specific decisions setting performance measures and goals and other actions impacting executive compensation focus on certain areas that are tied directly to our business planplan. These include revenue and are whatearnings growth, and return on total capital, which we believe are the most critical value drivers of the business, such as revenue and earnings growth and return on total capital.business.
TheSpecifically, the Annual Cash Incentive Award payout is tied to diluted earnings per share growth and return on total capital. The Performance Share Incentive Award payout is based on cumulative diluted earnings per share growth and cumulative revenue growth over a three-year period. The Performance Share Incentive Award payout is also impacted by share price performance, as the payout value (in dollars) is based on the settlement date share price. We believe that using the diluted earnings per share as a metric for both annual and long-term incentive awards is appropriate because it measures the rate at which management has succeeded in increasing the profits per unit of ownership by shareholders and is a measure commonly used by the investment community to evaluate performance.
Nordson Corporation – | | |
A Significant Portion of CEO Compensation Opportunity is Performance-Based and/orAt-Risk
We design our Chief Executive Officer’s compensation opportunity to be largely performance-based andat-risk. Consistent with our pay for performance philosophy and to incentivize Mr. Nagarajan to focus on performance, approximately 67.80% of the target total compensation opportunity for Mr. Nagarajan in 2019 (with base salary and annual bonus calculated on an annualized basis) wasat-risk and was designed to be based on attainment of performance metrics. This includes approximately 48.48% in the form of long-term, multi-year opportunities granted in performance shares, which depend on attainment ofpre-established performance metrics, and 19.32% was in anat-risk annual cash incentive opportunity. Theat-risk portion excludes Mr. Nagarajan’s minimum payout of his Annual Cash Incentive Award of $212,500, which was negotiated at his time of hire.
Principal Components of Chief Executive Officer Compensation
| Base Salary | |||||
• 25.76% of CEO’s total direct compensation (on an annualized basis) | ||||||
Annual Cash Incentive Award | ||||||
• 25.76% of CEO’s total direct compensation (on an annualized basis and at target) • 19.32% at risk; 6.44% guaranteed with a minimum payout of $212,500 • Target levels of incentive compensation are based on a percentage of base salary • Designed to drive high performance results year-over-year • Places significant portion of annual compensation at risk | ||||||
Long-term Incentive Awards | ||||||
• 48.48% of CEO’s total direct compensation • Aligns interests of executive officers with shareholders’ long-term interests • Performance Share Awards are payable in unrestricted Nordson common stock to the extentpre-established quantitative performance goals are met |
Mr. Nagarajan’s Compensation
In negotiating the 2019 compensation for Mr. Nagarajan, at the time of his hire, the Compensation Committee (the “Committee”) engaged the services of its independent compensation consultant, Exequity LLP (“Exequity”). In addition, the Committee considered a number of factors, including his prior executive experience and performance, and peer compensation. Considering these factors, the Committee established his total target direct compensation for 2019 as:
2019 Compensation Element | Value | |
Base Salary | $850,000 (on an annualized basis) | |
Annual Cash Incentive Award Target Opportunity | $850,000 (100% of base salary, prorated for 2019, with a guaranteed minimum payout of $212,500) | |
Performance Share Incentive Awards | ||
2017-2019 | 2,198 share units $300,000 economic grant date value | |
2018-2020 | 3,956 share units $540,000 economic grant date value | |
2019-2021 | 5,567 share units $760,000 economic grant date value | |
| 38 | | Nordson Corporation – 2020 Proxy Statement |
The performance share grants were made on his hire date, August 1, 2019, and the number of shares granted was determined by using the specified economic grant date value and the most recent fiscal quarter closing average share price of common stock immediately preceding the hire date and rounding to the nearest whole share. Mr. Nagarajan was guaranteed a minimum payout of the Annual Cash Incentive Award of $212,500 as part of his negotiated compensation which represented a prorated payout of the award at target (25% of $850,000), recognizing that he would serve as Chief Executive Officer for 25% of the fiscal year.
Mr. Hilton’s Compensation
The compensation paid to Mr. Hilton during his time as Chief Executive Officer was consistent with our pay for performance compensation philosophy that applies to all of our named executive officers. Considering Mr. Hilton’s tenure, experience, and performance, his total target direct compensation approximated the 75th percentile of other chief executive officers in our proxy peer group. Mr. Hilton’s actual annual and long-term incentive awards were aligned with our earnings per share growth, return on total capital, and revenue growth.
During its November 26, 2018 meeting, the Compensation Committee, with input from Exequity, established Mr. Hilton’s 2019 total target direct compensation as Chief Executive Officer, taking into account a number of factors, including a competitive market review, tenure and experience, relative internal pay equity, the Board’s assessment of Mr. Hilton’s multi-year performance, and the Company’s overall financial and operating performance. Considering these factors, the Committee established his 2019 compensation as:
2019 Compensation Element | Value | |
Base Salary | $945,000 (2.2% increase over 2018) | |
Annual Cash Incentive Award Target Opportunity | $945,000 (100% of base salary, same target percentage as 2018) | |
2019-2021 Performance Share Incentive Award Target Opportunity | 12,700 share units $1,586,230 grant date fair value | |
Stock Options | 51,400 shares $1,594,051* | |
Restricted Shares | 6,400 shares $799,360 grant date fair value | |
| * | The grant date fair value was determined using the Black-Scholes option pricing model on the date of grant. The actual value of stock option awards will be determined by the value of our common shares on the date of exercise. |
Mr. Hilton’s total direct compensation did not change as a result of his new position as Senior Advisor to the Company. Pursuant to the terms of Mr. Hilton’s Amendment to Employment Agreement, effective November 1, 2019, Mr. Hilton was no longer eligible to participate in the Long-Term Performance Plan or any successor plan, or any other long-term incentive plan implemented by the Company, except for the existing awards granted to Mr. Hilton prior to November 1, 2019.
Nordson Corporation – 2020 Proxy Statement | | 39 |
Shareholder Returns and 2019 Financial and Operating Highlights
The graph and corresponding table below comparescompare Nordson’s total shareholder return* for the ten yearten-year period ended October 31, 20182019 with that of the following indexes: the S&P 500, the S&P MidCap 400, Index,the S&P 500 Industrial Machinery, the S&P MidCap 400 Industrial Machinery, Index, and the median return of our peer group companies (assuming the reinvestment of all dividends). Both the chart and table show our strong long-term performance compared to our benchmarks and peers over aten-year period of time. We continue to achieve our long-term objective of creating and maximizing shareholder value, which is evidenced by our above-market return and outperformance of our peers and benchmarks.
| Comparison of 10 Year Cumulative Total Shareholder Return |
COMPARISON OF CUMULATIVE RETURN
| * | We define Total Shareholder Return (“TSR”) as: (share price at end of period – share price at start of period + dividends paid) / share price at start of period. |
ASSUMES $100 INVESTED ON NOVEMBER 1, 20082009
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED OCTOBER 31, 20182019
Company/Market/Peer Group | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nordson Corporation | $ | 100.00 | $ | 149.23 | $ | 226.27 | $ | 274.10 | $ | 356.22 | $ | 439.17 | $ | 471.10 | $ | 443.80 | $ | 632.04 | $ | 807.21 | $ | 788.83 | $ | 100.00 | $ | 151.62 | $ | 183.67 | $ | 238.70 | $ | 294.28 | $ | 315.68 | $ | 297.38 | $ | 423.52 | $ | 540.90 | $ | 528.58 | $ | 683.29 | ||||||||||||||||||||||||||||||||||||||||||||
S&P 500 Index | $ | 100.00 | $ | 116.52 | $ | 125.94 | $ | 145.09 | $ | 184.52 | $ | 216.38 | $ | 227.64 | $ | 237.90 | $ | 294.12 | $ | 315.73 | $ | 360.96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S&P MidCap 400 | $ | 100.00 | $ | 118.18 | $ | 150.84 | $ | 163.74 | $ | 183.57 | $ | 245.03 | $ | 273.58 | $ | 282.95 | $ | 300.65 | $ | 371.23 | $ | 375.02 | $ | 100.00 | $ | 127.64 | $ | 138.55 | $ | 155.32 | $ | 207.33 | $ | 231.49 | $ | 239.42 | $ | 254.39 | $ | 314.12 | $ | 317.33 | $ | 345.94 | ||||||||||||||||||||||||||||||||||||||||||||
S&P 500 Ind. Machinery | $ | 100.00 | $ | 127.95 | $ | 132.38 | $ | 158.43 | $ | 226.22 | $ | 255.10 | $ | 254.71 | $ | 290.84 | $ | 400.96 | $ | 369.97 | $ | 451.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S&P MidCap 400 Ind. Machinery | $ | 100.00 | $ | 123.61 | $ | 160.67 | $ | 182.73 | $ | 199.57 | $ | 277.07 | $ | 293.61 | $ | 245.77 | $ | 288.44 | $ | 413.70 | $ | 404.98 | $ | 100.00 | $ | 129.97 | $ | 147.82 | $ | 161.44 | $ | 224.14 | $ | 237.52 | $ | 198.82 | $ | 233.34 | $ | 334.67 | $ | 327.62 | $ | 389.31 | ||||||||||||||||||||||||||||||||||||||||||||
Peer Group | $ | 100.00 | $ | 108.45 | $ | 133.57 | $ | 150.02 | $ | 171.39 | $ | 238.19 | $ | 262.44 | $ | 252.27 | $ | 259.27 | $ | 388.10 | $ | 399.03 | $ | 100.00 | $ | 123.63 | $ | 139.16 | $ | 157.09 | $ | 217.28 | $ | 239.51 | $ | 230.50 | $ | 235.93 | $ | 354.82 | $ | 364.75 | $ | 464.87 | ||||||||||||||||||||||||||||||||||||||||||||
Source: Zack’s Investment Research
We place significant emphasis on long-term growth in our share price, and believeOur solid 2019 performance is the information provided in the graph and tables above to be important in understanding our compensation philosophy and its role in the achievementdirect result of our long-term objectives.multi-year efforts to diversify our portfolio, products, and customer base such that, in a challenging and competitive macroenvironment, the Company continued to deliver significant shareholder value.
| Nordson Corporation – |
The tables below represent fiscal years 2017 – 2019 as reported results for the three primary drivers of incentive compensation for the named executive officers – Diluted Earnings per Share, Return on Total Capital, and Revenue.
 |  |  |
| * | In 2018 and 2019, the Company experienced benefits from the Tax Cuts and Jobs Act. The Company’s 2018 and 2019 data, excluding the benefits from the Tax Cuts and Jobs Act, and utilizing a more normalized effective tax rate, were: Diluted Earnings Per Share was $5.70 and $5.37, respectively, and Return on Total Capital was 14% and 13%, respectively, which were used in calculating the Annual Cash Incentive Award and Performance Share Incentive Award payouts for our named executive officers. |
Nordson Corporation – 2020 Proxy Statement | | 41 |
PART II: SETTING EXECUTIVEDISCUSSION OF OUR COMPENSATION PROGRAM
Executive Compensation Decision Process
Role of the ShareholderSay-on-Pay Vote
TheIn setting executive compensation, the Committee believes thatconsiders the results of the advisory“say-on-pay”say-on-pay shareholder vote. The Committee believes the historical results of the advisorysay-on-pay shareholder vote represent an affirmation of our current pay practices and philosophies and, asphilosophies. As a result, no significant changes were made to our executive compensation pay practices for 2018.2019. The Committee will continue to consider the outcome of thesay-on-pay vote when making future compensation decisions for the named executive officers. The results of oursay-on-pay vote for the past five years are as follows:
Annual Meeting Year
|
FOR Vote (%)
| FOR Vote (%) | |||||
2014 | 97.90 | ||||||
2015 | 98.50 | 98.50 | |||||
2016 | 98.97 | 98.97 | |||||
2017 | 98.11 | 98.11 | |||||
2018 | 97.70 | 97.70 | |||||
2019 | 97.95 | ||||||
At the 2017 Annual Meeting, the Company’s shareholders voted in favor of an annual frequency for holding our“say-on-pay”say-on-pay vote, which the Board subsequently approved. The next shareholder vote on the frequency of our advisory“say-on-pay”say-on-pay vote is expected to be held at our 2023 Annual Meeting.
Role of the Compensation Committee
The Committee is made upconsists entirely of independent directors as defined by our Governance Guidelines and Nasdaq listing standards and is supported by our human resources department. It has responsibility for establishing our executive compensation program and for making compensation decisions under the program. In fulfilling its duties and responsibilities for 2018,2019, the Committee sought input, advice, and recommendations from an independent executive compensation consultant as well as recommendations from our Chief Executive Officer, Mr. Hilton.Officer. At all times, however, the Compensation Committee exercised independent judgment in making executive compensation decisions.
Role of theThird-Party Executive Compensation Consultant
The Committee retained Exequity LLP (“Exequity”) as theits independent executive compensation consultant reportingto support the Committee’s oversight and management of our executive compensation programs. Exequity reports directly to the Committee. Exequity provides research, data analyses, survey information,Committee, and design expertise in developing compensation programs forits responsibilities include assisting the Committee with validating our executive officers.compensation plans and programs through periodic studies and analysis. In addition, Exequity informs the Committee of regulatory developments and market trends related to executive compensation practices. The Committee has assessedCommittee’s written policies require that it annually assess the independence of Exequity in light of SEC rules and Nasdaq listing standardsstandards. In 2019, the Committee performed this assessment and concluded that no conflict of interest would preventprevented Exequity from independently and objectively advising the Committee.
Role of Executive Management
Mr. Hilton and Ms. Shelly Peet,Our Chief Executive Officer, along with our Executive Vice President of Human Resources, & Information Systems, provide additional information and analysis as requested by the Committee. More specifically, Mr. Hilton, while serving as Chief Executive Officer, Mr. Nagarajan, after his election to Chief Executive Officer, and Ms. Peet, Executive Vice President of Human Resources, provided support for Committee meetings and made recommendations about designs for, and, if warranted, changes to, our Annual Cash Incentive Award and long-term equity-based awards. In addition to the responsibilities above, Mr.Messrs. Nagarajan and Hilton, also: (a)(i) provided to the Board of Directors a self-assessment of his performance for the fiscal year; (b)their respective performances while serving as Chief Executive Officer; (ii) provided an
| 42 | | Nordson Corporation – 2020 Proxy Statement |
assessment of each executive officer’s performance;performance during their respective tenures as Chief Executive Officer; and (c)(iii) recommended annual base salary adjustments, payouts of Annual Cash Incentive Awards and Performance Share Incentive Awards, and equity awards for executive officers other than himself.themselves.
Benchmarking-Peer Group and Compensation Surveys
Our compensation peer group for 2019, which was developed in consultation with Exequity, consisted of the 20 publicly-traded companies listed below. The Committee believes the listed companies serve as the appropriate peer group because they have: (i) revenues generally within the range of 0.5x - 2.0x Nordson’s revenue; (ii) a global scope and business complexity; (iii) a focus on precision industrial manufacturing, innovation and technology; (iv) global growth strategies; and (v) profiles or business models similar to Nordson’s, based on industries or diverse markets served. The Committee reviews the peer group annually and makes appropriate modifications from time to time so that the group closely resembles our competitive market for executive talent. For 2019, two companies, Gardner Denver Holdings, Inc. and National Instruments Corporation, were added to the peer group because they met the criteria established for peer group inclusion.
Company | Revenue* ($MMs) | Market Cap As of Dec. 2017 | ||||||
Actuant Corporation | $ | 1,096 | $ | 1,517 | ||||
Albany International Corp. | $ | 864 | $ | 1,976 | ||||
AMETEK Inc. | $ | 4,300 | $ | 16,749 | ||||
Barnes Group Inc. | $ | 1,436 | $ | 3,392 | ||||
Chart Industries Inc. | $ | 989 | $ | 1,442 | ||||
Donaldson Company, Inc. | $ | 2,372 | $ | 6,359 | ||||
Entegris, Inc. | $ | 1,343 | $ | 4,306 | ||||
Esterline Technologies Corp. | $ | 2,002 | $ | 2,220 | ||||
FLIR Systems, Inc. | $ | 1,800 | $ | 6,460 | ||||
Gardner Denver Holdings, Inc. | $ | 2,375 | $ | 6,651 | ||||
Graco, Inc. | $ | 1,475 | $ | 7,615 | ||||
IDEX Corporation | $ | 2,287 | $ | 10,083 | ||||
ITT, Inc. | $ | 2,585 | $ | 4,697 | ||||
Keysight Technologies, Inc. | $ | 3,189 | $ | 7,791 | ||||
Lincoln Electric Holdings, Inc. | $ | 2,624 | $ | 6,022 | ||||
National Instruments Corporation | $ | 1,289 | $ | 5,443 | ||||
Roper Technologies, Inc. | $ | 4,607 | $ | 26,512 | ||||
Teradyne, Inc. | $ | 2,137 | $ | 8,213 | ||||
Watts Water Technologies, Inc. | $ | 1,457 | $ | 2,594 | ||||
Woodward, Inc. | $ | 2,099 | $ | 4,688 | ||||
75th Percentile | $ | 2,532 | $ | 7,747 | ||||
Average | $ | 2,148 | $ | 6,813 | ||||
Median | $ | 2,050 | $ | 5,359 | ||||
25th Percentile | $ | 1,442 | $ | 2,793 | ||||
Nordson Corporation | $ | 2,067 | $ | 8,454 | ||||
| * | Revenue values are as of the most recent fiscal year end prior to or before December 2017. |
Nordson Corporation – | | |
Where peer group proxy data was not available, and as a reference and a primary source of data for the functional leaders, we utilized survey data published by Aon Hewitt for the position or positions that most closely match the job description of each named executive officer or executive officer position.
Setting Goals and Compensation
In order to focus on delivering growth and value for shareholders over time and to communicate consistently with investors and other stakeholders, we take a longer termlong-term approach to incentive compensation wherein ourcompensation. Our incentive plan targets remain consistent for a multi-year period of time, which is more aligned with our five yearfive-year strategic plan cycle. We annually assess measures and performance goals (threshold, target, and maximum) to validate that they are set appropriately based on internal and external factors, such as historic peer performance, long-term growth projections for Nordson, our own past and current performance, and market conditions and expectations.
The most heavily weighted component of our annual review of incentive goals is the historical performance of our peers, particularly our proxy peers, though we also review a group ofmid-cap industrial peers for reference. For each corporate measure, we review theone-, three-, and five-year median performance of our peers in comparison to our performance goals. In general, if our performance goals fall outside a corridor around the median peer performance for two consecutive years, we further evaluate the appropriateness of our goals.
Using two consecutive years outside our range of peer median performance for a metric as our guideline, we complete a full review to determine whether we should make a change. We look at additional internal and external data to further develop our recommendation.
Nordson expected future performance based on our five-year strategic plan: This allows us to assess whether our future expected performance continues to align with existing incentive targets and therefore would indicate that our goals should stayas-is, or whether our five-year plan expected performance projections are more in line with the movement in peer performance, and suggest we consider an adjustment.
| • | Nordson expected future performance based on our five-year strategic plan. This allows us to assess whether our future expected performance continues to align with existing incentive targets and therefore would indicate that our goals should stayas-is, or whether our five-year plan expected performance projections are more in line with the movement in peer performance, and suggest we consider an adjustment. |
Nordson historic performance: Our historic performance is reviewed along with projected future performance to help us assess whether we believe targets should be changed.
| • | Nordson historic performance. Our historic performance is reviewed along with projected future performance to help us assess whether we believe targets should be changed. |
Other external factors: Consideration of economic conditions, investor and shareholder expectations, pay for performance alignment, and other factors also contribute to our final recommendation as to whether or not our target should be adjusted.
| • | Other external factors. Consideration of economic conditions, investor and shareholder expectations, pay for performance alignment, and other factors also contribute to our final recommendation as to whether or not our targets should be adjusted. |
Based on a qualitative analysis of all factors, and considering input from the independent executive compensation consultant, the Compensation Committee may change goals or to retain the targets currently in place.
Peer Group and Compensation Surveys
Our compensation peer group for 2018, which was developed in consultation with Exequity, consisted of the 18 publicly-traded companies listed below. The Committee believes the listed companies serve as the appropriate peer group because they have revenues generally within the range of 0.5x — 2.0x Nordson’s revenue; a global scope and business complexity; a focus on precision industrial manufacturing; innovation and technology; global growth strategies; and profiles or business models similar to Nordson’s, based on industries or diverse markets served. The Committee regularly reviews the peer group and makes appropriate modifications from time to time so that the group closely resembles our competitive market for executive talent.
Company
|
Revenue*
|
Market Cap As of Dec. 2017
| ||||||
Actuant Corporation
| $
| 1,096
|
| $
| 1,517
|
| ||
Albany International Corp.
| $
| 864
|
| $
| 1,976
|
| ||
AMETEK Inc.
| $
| 4,300
|
| $
| 16,749
|
| ||
Barnes Group Inc.
| $
| 1,436
|
| $
| 3,392
|
| ||
Chart Industries Inc.
| $
| 989
|
| $
| 1,442
|
| ||
Donaldson Company, Inc.
| $
| 2,372
|
| $
| 6,359
|
| ||
Entegris, Inc.
| $
| 1,343
|
| $
| 4,306
|
| ||
Esterline Technologies Corp.
| $
| 2,002
|
| $
| 2,220
|
| ||
FLIR Systems, Inc.
| $
| 1,800
|
| $
| 6,460
|
| ||
Graco, Inc.
| $
| 1,475
|
| $
| 7,615
|
| ||
IDEX Corporation
| $
| 2,287
|
| $
| 10,083
|
| ||
ITT Corporation
| $
| 2,585
|
| $
| 4,697
|
| ||
Keysight Technologies, Inc.
| $
| 3,189
|
| $
| 7,791
|
| ||
Lincoln Electric Holdings, Inc.
| $
| 2,624
|
| $
| 6,022
|
| ||
Roper Technologies, Inc.
| $
| 4,607
|
| $
| 26,512
|
| ||
Teradyne, Inc.
| $
| 2,137
|
| $
| 8,213
|
| ||
Watts Water Technologies, Inc.
| $
| 1,457
|
| $
| 2,594
|
| ||
Woodward, Inc.
| $
| 2,099
|
| $
| 4,688
|
| ||
75th Percentile
| $
| 2,532
|
| $
| 7,747
|
| ||
Average
| $
| 2,148
|
| $
| 6,813
|
| ||
Median
| $
| 2,050
|
| $
| 5,359
|
| ||
25th Percentile
| $
| 1,442
|
| $
| 2,793
|
| ||
Nordson Corporation
| $
| 2,067
|
| $
| 8,454
|
| ||
|
Prior to the date that 2018 compensation was set, CLARCOR, Inc. was acquired by Parker-Hannifin (NYSE: PH) and it ceased to be an independent public entity and was removed from our peer group. Where peer group proxy data was not available, and as a reference and a primary source of data for the functional leaders, we utilized survey data published by Aon Hewitt for the position or positions that most closely match the job description of each named executive officer or executive officer position.
|
Allocation of Executive Compensation
Our executive compensation program does not prescribe a specific formula for the mix of base salary and annual and long-term incentive components so that we have flexibility in developing an appropriate compensation mix. The table below reflects the approximate allocation mix at target among the three elements of total target direct compensation — base salary, Annual Cash Incentive Award opportunity, and long-term equity-based incentive award opportunity — for our named executive officers at the time we set compensation for 2018:
Hilton Thaxton KeaneMerkPembrokeLong-Term Incentive70.6%Annual Cash Incentive 14.7%Base Salary 14.7%56.2%18.0%25.8%56.9%17.7%25.3%51.8%19.0%29.2%49.6%19.9%30.6%
85% of the total direct compensation for Mr. Hilton and approximately 69% - 75% for the other named executive officers is delivered through awards that link pay to financial and operational performance. Incentive payouts under our Annual Cash Incentive Award are based on growth in diluted earnings per share, return on capital, and operating unit results. Equity-based compensation consists of performance share units,non-qualified stock options, and service-based restricted shares, all of which align compensation with the long-term interests of our shareholders.
PART III: KEY COMPONENTS OF OUR EXECUTIVE COMPENSATION PROGRAM
The table below summarizes the components and objectives of our 2018 compensation program for executive officers, including our named executive officers, and the actions taken by the Compensation Committee relative to each component.
|
|
| ||
| ||||
| ||||
|
Below is a depiction of the elements of the pay components outlined above. A detailed discussion of these elements is found under the captions “Key Components of Our Executive Compensation Program” and “Other Components of Our Executive Compensation Program” in Parts III and IV of this Compensation Discussion and Analysis, respectively.
Base Salary (fixed)Cash Incentive (variable; 0-200% of target; target varies by position)Long-Term Incentives (variable)PerquisitesCorporate Measures (50% of total payout)Operating Unit Measures (50% of total payout)Restricted Stock (20% of total target LTI)Stock Options (40% of total target LTI)Performance Shares (40% of total target LTI)Executive Physical Tax Assistance / Financial Planning (up to $5K) 2 Airline Club MembershipsProfitability: EPS GrowthReturn on Total CapitalRevenue Op. Profit Op. Margin DSI Asset TurnsProfitability: 3-year Cumulative EPS (50% of total payout)Growth: 3-year Cumulative Revenue (50% of total payout)
Base Salary
The Committee determines annually the base salaries of our executive officers, including whether to award base salary increases from the previous year and, if so, the magnitude of the increase, based on the following factors:
level of experience and responsibility;
Company, business segment, and individual performance during the prior year;
|
market and survey data;
internal pay equity;
the Committee’s assessment of other elements of compensation provided to the executive officer; and
our Chief Executive Officer’s recommendation for all executive officers other than himself.
2018 Actions and Analysis
Considering Exequity’s input and analysis and the recommendations of our Chief Executive Officer, we set individual base salaries of our named executive officers for 2018 at a level consistent with the general objective of paying total target direct compensation to approximate the median of our peer group; however, each executive officer’s position relative to median may vary depending on a consideration of factors such as tenure, experience, future potential, internal pay equity, and performance.
The following table reflects the annualized base salaries of our named executive officers for 2018 and 2017(year-end):
Name
|
Base Salary
|
Base Salary
|
Increase in Base Salary (%)
| ||||||||||||
Michael F. Hilton
|
| 925,000
|
|
| 875,000
|
|
| 5.7
|
| ||||||
Gregory A. Thaxton
|
| 470,000
|
|
| 450,000
|
|
| 4.4
|
| ||||||
John J. Keane
|
| 455,000
|
|
| 435,000
|
|
| 4.6
|
| ||||||
Gregory P. Merk
|
| 420,000
|
|
| 403,000
|
|
| 4.2
|
| ||||||
Jeffrey A. Pembroke
|
| 415,000
|
|
| 403,000
|
|
| 3.0
|
| ||||||
Annual Cash Incentive Award
Purpose
The purpose of the Annual Cash Incentive Award is to drive high-performance results year-over-year based on the achievement ofpre-established quantitative performance goals which focus our executives on key business strategies and align the interests of our executive officers with our shareholders. Through the Annual Cash Incentive Award, executive officers are provided the opportunity to earn a significantly higher payout if target performance is exceeded but bear the risk of a lower payout if target performance is not achieved, and no payout if threshold performance is not achieved.
Measures
Performance and payouts under the Annual Cash Incentive Award are determined based on quantitative corporate financial measures — diluted earnings per share growth and return on total capital — and quantitative operating measures. As noted above, the Compensation Committee voted to exclude from the executive compensation analysis, including calculation of the 2018 annual incentive awards, all financial benefits the Company received as a result of the Tax Cuts and Jobs Act passed in 2017.
We consider diluted earnings per share growth and return on total capital to be measures critical to our success. We believe these measures offer the proper balance between growth and profitability. We also believe that achieving greater return on total capital and earnings per share growth over time will drive improved shareholder return and foster maximum value for our assets. More specifically:
Diluted earnings per share growth measures the rate at which management has succeeded in increasing the profits per unit of ownership by shareholders. Earnings per share growth is easily compared among peers and the measure is commonly used by the investment community to evaluate performance. The formula we utilize for diluted earnings per share is net income divided
|
Return on total capital measures the amount of profitability per unit of capital invested by management to generate earnings. We have adopted a definition of return on total capital that is consistent with financial disclosure in our Report on Form10-K: the sum of net income (loss) plusafter-tax interest expense on debt as a percentage of the sum of average of quarterly debt (net of cash) plus average quarterly shareholders’ equity over five accounting periods.
For named executive officers that have responsibility for certain corporate functions (including our Chief Executive Officer and Chief Financial Officer), the corporate financial measures account for 50% of any payout with a weighted average of the business unit quantitative operating measures accounting for the other 50% of the payout. For the operating unit named executive officers, the corporate financial measures account for 50% of any payout with the respective operating unit’s quantitative operating measures accounting for the other 50% of the payout.
Effect of Currency Fluctuation Policy
The Committee, after considering a number of factors, including peer and survey group practices and receiving input from Exequity, has determined that management should be held accountable for some, but not all, of the effect of currency fluctuation on corporate financial and operating unit performance results. Accordingly, in determining Annual Cash Incentive Award and Performance Share Incentive Award payouts, the Committee adopted a policy whereby management will be held accountable for the first 10% of the impact on payouts due to currency fluctuation.
Under the policy, payout rates (as a percent of target) for the Annual Cash Incentive Award are calculated at actual foreign currency rates and currency neutral rates for the U.S. Dollardollar during the fiscal year. The difference between total payout rates under these two translation methods is all currency related, and the Committee has determined that the first 10% of this difference should not affect final payouts. The final payout includes a currency adjustment equal to the difference between these two payout rates less 10%, which represents a corridor or range of fluctuation in currency rates for which management is accountable. We believe this policy is appropriate because it requires management to respond to currency fluctuations within a specified range. However, it does not unfairly benefit or harm management if currency impact is beyond what may be considered normal and not under management’s control.
As an example of the policy in practice, if the difference between the two payout percentage rates is equal to or less than +/- 10 percentage points, the Annual Cash Incentive Award payout will be based on the calculation at
| 44 | | Nordson Corporation – 2020 Proxy Statement |
actual currency rates, with no adjustment. When the payout percentage at actual currency rates is more than 10 percentage points lower than the payout percentage rate at currency neutral rates, the final payout will be based on the currency neutral calculation adjusted downward by 10 percentage points. Conversely, when the payout percentage rate at actual currency rates is more than 10 percentage points higher than the payout percentage rate at currency neutral rates, the final payout rate will be based on the currency neutral calculation adjusted upward by 10 percentage points.
In certifying the results for the financial performance measures employed in calculating the Performance Share Incentive Award, the Committee applies the same methodology as described in the section above, with the revenue and earnings per share at currency neutral rates reflecting the cumulative effect of differences from actual exchange rates over the three-year versusone-year performance period.
Foreign Currency Translation Methodology
For purposes of applying the currency adjustment policy, current year financial statements and supplemental schedules are retranslated at the prior yearyear’s exchange rates using the same methodology as disclosed in Note 1 in the “Notes to Consolidated Financial Statements” section of our Form10-K for 20182019 to determine the currency neutral result, with the exception that we do not attempt tore-measure gains and losses, based on a retranslation at the prior yearyear’s exchange rates, from foreign currency transactions, including forward contracts, of Nordson’s subsidiaries and the United States parent, in order to include the effect in net income. All currency rates are determined from published sources. Monthly average rates are the average of daily spot rates of currency exchange. The annual measurement period is the sum of each month translated at monthly average rates.
The table below summarizes the components and objectives of our 2019 total direct compensation program for executive officers, including our named executive officers.
Element of Pay | Form | Links to Performance | Link to Compensation | |||
Base Salary | Cash | Fixed annual compensation | • Attract and retain exceptional executive talent by providing market competitive salaries. • Compensate executives for their responsibilities, experience, and individual performance. | |||
Annual Cash Incentive Award | Cash | Corporate payout is tied to year-over-year growth in earnings per share and return on total capital. For the operating unit named executive officers, the corporate financial measures account for 50% of any payout with the respective operating unit’s quantitative operating measures accounting for the other 50% of the payout. | • Drives key business, operating, and individual results on an annual basis. • Strictly performance-based againstpre-established corporate and financial business unit metrics, no payout guaranteed, except for $212,500 of Mr. Nagarajan’s 2019 bonus opportunity. | |||
Long-Term Incentive Awards | Performance Share Units Stock Options Restricted Stock | Tied to3-year cumulative earnings per share and3-year cumulative revenue. Aligned with shareholder returns, because all awards are denominated in shares of stock or share units. | • Value tied to share price and with respect to performance share units, to achievement ofpre-established long-term financial goals. • Links executive officer and long-term shareholder interests. • Serves as a key attraction and retention tool and a strong long-term performance driver. • Multiyear long-term retention. | |||
Nordson Corporation – | | |
2018 Actions and Analysis
During our November 20, 2017 meeting, and taking into consideration Exequity’s analysisBelow is a depiction of the peer groupelements of the total direct compensation components.
Our executive compensation program does not prescribe a specific formula for the mix of base salary and annual and long-term incentive opportunities, we set a target payout opportunity forcomponents. This allows us to develop an appropriate compensation mix, depending on business performance.
| Base Salary |
The Committee determines annually the base salaries of our named executive officers, as well asincluding whether to award base salary increases from the thresholdprevious year and, maximum payout opportunity as a percentageif so, the magnitude of annualized base salaries. Thethe increase, based on the following table reflects the payout opportunities as a percentage of base salary:factors:
| Incentive Amount as a Percentage (%) of Base Salary | ||||||
Name
|
Threshold
|
Target
|
Maximum
| |||
Michael F. Hilton
|
50.0
|
100
|
200
| |||
Gregory A. Thaxton
|
35.0
|
70
|
140
| |||
John J. Keane
|
35.0
|
70
|
140
| |||
Gregory P. Merk
|
32.5
|
65
|
130
| |||
Jeffrey A. Pembroke
|
32.5
|
65
|
130
| |||
We then establishedlevel of experience and responsibility;
Company, business segment, and individual performance during the prior year;
market and survey data;
internal pay equity;
the Committee’s assessment of other elements of compensation provided to the executive officer; and
our Chief Executive Officer’s recommendation for all executive officers other than himself.
| Annual Cash Incentive Award |
The Annual Cash Incentive Award drives high-performance results year-over-year based on the achievement ofpre-established quantitative corporate financial performance measures and goals which measures account for 50%focus our executives on key business strategies and align the interests of our executive officers with our shareholders. Through the Annual Cash Incentive Award, executive officers are provided the opportunity to earn a significantly higher payout (if any):if target performance is exceeded, but bear the risk of a lower payout if target performance is not achieved, and no payout if threshold performance is not achieved.
Performance and payouts under the Annual Cash Incentive Award are determined based on quantitative corporate financial measures — diluted earnings per share growth and return on total capital — and quantitative operating measures.
We consider diluted earnings per share growth and return on total capital to be measures critical to our success. We believe these measures offer the proper balance between growth and profitability. We also believe that achieving greater return on total capital and earnings per share growth over time will drive improved shareholder return and foster maximum value for our assets. More specifically:
Measure
|
Threshold
|
Target
|
Maximum
|
Weighting
| ||||
Diluted Earnings Per Share Growth
|
0%
|
8%
|
20%
|
50%
| ||||
Return on Total Capital
|
8.0%
|
11.5%
|
16%
|
50%
|
|
OperatingDiluted earnings per share growth measures the rate at which management has succeeded in increasing the profits per unit performance measuresof shareholder ownership. Earnings per share growth is easily compared among peers and respective weighting were set through a collaborative effort between the Committee and Mr. Hilton:
|
| |||
|
| |||
| ||||
| ||||
| ||||
| ||||
Individual operating unit performance goals and results are not disclosed in this CD&A becausemeasure is commonly used by the investment community to evaluate performance. The formula we believe that the disclosure would result in competitive harm to usutilize for diluted earnings per share is net income divided by potentially disrupting our customer, vendor and supplier relationships and providing our competitors with insight into our business strategies beyond what is disclosed publicly. We also do not believe that the disclosure of individual operating unit performance goals and results for 2018 is material to an understanding of our 2018 executive compensation program as covered by this Proxy Statement.weighted average common diluted shares outstanding.
| Nordson Corporation – |
Determining Payout Amounts
DeterminationReturn on total capital measures the amount of profitability per unit of capital invested by management to generate earnings. We have adopted a definition of return on total capital that is consistent with financial disclosure in our Report on Form10-K:the Annual Cash Incentive Award payout is asum of net income (loss) plustwo-stepafter-tax process:
Step 1: Calculation of the Payout Rate (as a % of Target)interest expense on an Actual Currency and Currency Neutral Basis
Prior to applying the currency adjustment policy described above, the Committee first certified performance and calculated payoutsdebt as a percentage of target for the corporate financial measures:
Actual Currency — Performance Unadjusted for Effectsum of Currency Fluctuation, and
Currency Neutral — Performance Adjusted for Effectaverage of Currency Fluctuation
The results are reflected in the following table:
| Measures | Target Performance | Performance at Actual Currency | Payout at (% of Target) | Performance Neutral | Payout at Currency Neutral (% of Target) | |||||||
Diluted Earnings Per Share Growth
|
$5.49
|
$5.70*
|
134.4
|
$5.41*
|
|
90.2
|
| |||||
Return on Total Capital
|
11.5%
|
13.7%*
|
148.9
|
13.1%*
|
|
135.6
|
| |||||
Combined Corporate Factor
|
141.6
|
|
112.9
|
| ||||||||
|
The Committee next certified the operating units’ results, at actual currency and at currency neutral. The rangequarterly debt (net of results, as a percent of target, were:cash) plus average quarterly shareholders’ equity over five accounting periods.
Operating Unit Results
|
| |
|
| |
|
|
Step 2: Calculation of Payouts to Named Executive Officers Applying the Currency Adjustment Policy
For named executive officers who have responsibility for certain corporate functions (including our Chief Executive Officer and Chief Financial Officer), the corporate financial measures account for 50% of any payout with a weighted average of the business unitoperating units’ quantitative operating measures accounting for the other 50% of the payout. For the operating unit named executive officers, the corporate financial measures account for 50% of any payout with the respective operating unit’s quantitative operating measures accounting for the other 50% of the payout.
|
Following the process outlined in Step 1, the Committee determined the combined factor payouts, as a percent of target, and applied the currency adjustment policy. The results are presented in the tables below:
Actual Currency:
| Named Executive Officer | Target Payout | Corporate (% of Target)) | Operating Unit (% of Target) | Combined Factor Payout (% of Target) | ||||||
Michael F. Hilton
|
925,000
|
141.6
|
127.6 (Weighted)
|
|
134.6
|
| ||||
Gregory A. Thaxton
|
329,000
|
141.6
|
127.6 (Weighted)
|
|
134.6
|
| ||||
John J. Keane
|
318,500
|
141.6
|
95.1
|
|
118.4
|
| ||||
Gregory P. Merk
|
273,000
|
141.6
|
185.5
|
|
163.6
|
| ||||
Jeffrey A. Pembroke
|
269,750
|
141.6
|
157.3
|
|
149.5
|
| ||||
Currency Neutral:
| Named Executive Officer | Target Payout | Corporate (% of Target) | Operating Unit (% of Target) | Combined Factor Payout (% of Target) | ||||||
Michael F. Hilton
|
925,000
|
112.9
|
101.0 (Weighted)
|
|
107.0
|
| ||||
Gregory A. Thaxton
|
329,000
|
112.9
|
101.0 (Weighted)
|
|
107.0
|
| ||||
John J. Keane
|
318,500
|
112.9
|
80.0
|
|
96.5
|
| ||||
Gregory P. Merk
|
273,000
|
112.9
|
114.3
|
|
113.6
|
| ||||
Jeffrey A. Pembroke
|
269,750
|
112.9
|
156.0
|
|
134.5
|
| ||||
Under the currency adjustment policy, because the payout calculation at actual currency was higher than payout at currency neutral by more than ten percentage points, final payouts were adjusted upward by ten percentage points from the currency neutral calculation, reflecting the Committee’s position that payouts should be affected by only the first ten percentage points of the impact of currency fluctuation:
Named Executive Officer | Target Payout | Actual Payout ($) | ||||
Michael F. Hilton
|
925,000
|
|
1,082,250
|
| ||
Gregory A. Thaxton
|
329,000
|
|
384,930
|
| ||
John J. Keane
|
318,500
|
|
339,203
|
| ||
Gregory P. Merk
|
273,000
|
|
337,428
|
| ||
Jeffrey A. Pembroke
|
269,750
|
|
389,789
|
| ||
Except for excluding the financial benefits the Company received from the Tax Cuts and Jobs Act, no discretion was exercised to increase or decrease the formulaic incentive award payouts to the named executive officers.
Long-Term Incentive Awards
Our long-term incentive awards are delivered through a combination of three forms of equity: (i) incentive-based performance share units; (ii) stock options; and (iii) service-based restricted shares. This combination of awards balances the opportunity between performance share units, which are earned based on multi-year financial performance, and stock options and restricted shares, the value of which is based on performance of our common shares.
The Committee begins the process of determining equity awards by comparing our equity compensation programs to those of our peer group. The Committee also reviews market compensation data based on survey data provided by Aon Hewitt.
In reaching a final decision on the mix and amount of equity compensation our named executive officers should receive, the Committee takes numerous factors into consideration. As referenced above, market alignment and competitiveness are key factors the Committee considers in setting equity compensation levels. Other factors considered are current industry trends, practices among our peer group, and the behaviors the awards are intended to drive. In addition to these factors, the Committee places significant weight on the dilutive impact equity issuances have on our shareholders. In assessing dilution, the Committee considers the annualized effect of equity compensation by analyzing the equity “burn rate” overone- and three-year periods. Burn rate, in its simplest form, is determined by dividing the projected number of shares to be issued to employees by the weighted average number of shares outstanding. The Committee also considers the aggregate impact of all past equity compensation grants by looking at the company’s equity compensation “overhang.” Overhang is determined by dividing all outstanding equity grants and shares available for future grants by the total number of shares outstanding. The resulting percentage provides the Committee with insight into the long-term cost of the Company’s equity compensation programs.
ApproximateThe approximate allocation of the three equity components (as a percent of the long-term incentive compensation opportunity) is as follows:follows (other than the allocation for Mr. Nagarajan for 2019, his first partial year of service as CEO):
Equity Form | % of Opportunity | |||||||||
Performance Share Units | 40 | |||||||||
Stock Options | 40 | |||||||||
Restricted Shares |
| |||||||||
| 20 | |||||||||
Performance Share Incentive Award
A portion of each named executive officer’s total direct compensation opportunity is in the form of performance share units which are settled in unrestricted Nordson Common Stockcommon stock at time of payout.
Purpose
The purpose of the Performance Share Incentive Award is to drive high-performance results over a longer period (three years) based on the achievement ofpre-established quantitative performance goals which focus our executives on key business strategies and align the interests of our executive officers with our long-term shareholders. Executive officers are provided the opportunity to earn a significantly higher payout if target performance is exceeded but bear the risk of a lower payout if target performance is not achieved, and no payout if threshold performance is not achieved.
|
Measures and Goals
In selecting the quantitative performance measures and goals, the Committee considers whether the measures are appropriately aligned with those in the Annual Cash Incentive Award so that the overall compensation design does not unintentionally encourage our executive officers to take unnecessary or excessive risk or actions that are inconsistent with our year-over-year and long-term objectives. Performance and payouts under the
Nordson Corporation – 2020 Proxy Statement | | 47 |
Performance Share Incentive Awardare determined based on quantitative corporate financial measures — cumulative—cumulative diluted earnings per share growth and cumulative revenue growth. We believe these measures offer the proper balance between growth and profitability over a longer term. More specifically:
Cumulative diluted earnings per share growth measures the rate at which management has succeeded in growing profits on a sustained basis over a three-year period. We believedefine it isas the constant percentage by which diluted earnings per share would need to grow over a base period amount during a three-year period such that the sum of diluted earnings per share calculated at such a constant growth rate for such three years is equal to the sum of the actual diluted earnings per share earned over the same three-year period. We believe it is a superior measure of sustained earnings growth because it is influenced by the earnings performance during each year of the performance period rather than simply a compound growth rate that compares the final year’s earnings to the base period amount.
Cumulative revenue growth measures the rate at which management has succeeded in growing revenue on a sustained basis over a three-year period. We believedefine it isas the constant percentage by which revenue would need to grow over a base period amount during a three-year period such that the sum of revenue growth calculated at such a constant growth rate for such three years is equal to the sum of the actual revenue growth over the same three-year period. We believe it is a superior measure of sustained revenue growth because it is influenced by revenue performance during each year of the performance period rather than simply a compound growth rate that compares the final year’s revenues to the base period amount. While the growth in profits and profitability are of primary importance, management is also expected to grow the size and scale of the enterprise and cumulative revenue growth is an effective measure of their success in doing so.
As noted above, the Compensation Committee voted to exclude from the executive compensation analysis, including calculation of the 2018 long term incentive awards, all financial benefits the Company received as a result of the Tax Cuts and Jobs Act passed in 2017.
Effect of Foreign Currency Fluctuation
The Committee has determined that the currency adjustment policy described in the “Annual Cash Incentive Award” section above should also apply to the determination of Performance Share Incentive Award payouts.
Foreign Currency Translation Methodology
In certifying the results for the financial performance measures employed in calculating the Performance Share Incentive Award, the Committee applies the same methodology described in the “Annual Cash Incentive Award” section above, with the revenue and earnings per share at currency neutral rates reflecting the cumulative effect of differences from actual exchange rates over the three-year versusone-year performance period.
2018 Actions and Analysis
During its November 23, 2015 meeting, the Committee established quantitative performance measures and goals for the 2016-2018 Performance Share Incentive Award. These measures are equally-weighted.
| Measure | Threshold | Target | Maximum | |||
Cumulative Diluted Earnings Per Share Growth
| 4%
| 8%
| 14%
| |||
Cumulative Revenue Growth | 5% | 7% | 11% |
Determination of Payout Amounts
Determination of the Performance Share Incentive Award payouts is atwo-step process:
Step 1: Calculation of the Payout Rate (as a % of Target) on an Actual Currency and Currency Neutral Basis
Prior to applying the Currency Adjustment Policy described above, the Committee first certified performance for the Cumulative Earnings per Share Growth and Cumulative Revenue measures:
Actual Currency – performance unadjusted for the effect of currency fluctuation, and
Currency Neutral – performance adjusted for the effect of currency fluctuation.
Following this certification process, the Committee calculated the payouts as a percent of target. The results are reflected in the following table:
Measures
| Target Performance
| Performance
|
Payout at (% of Target)
| Performance
|
Payout at (% of Target)
| |||||
Cumulative Diluted Earnings
|
$12.10
|
$15.51^
|
100%
|
$15.85^
| 100%
| |||||
Cumulative Revenue
|
$5,809*
|
$6,130.7*
|
85.3%
|
$6,174.9*
|
90.2%
| |||||
Combined Factor
|
185.3%
| 190.2% |
|
|
Step 2: Calculation of Payouts to Named Executive Officers Applying the Currency Adjustment Policy
Under the currency adjustment policy, because the difference between the two payout percentage rates is equal to or less than +/- 10 percentage points, the final payouts for the 2016-2018 performance period are based on the calculation at actual currency rates, with no adjustments:
| Named Executive Officer | Target Payout Opportunity (# of Shares) |
Post-Currency (% of Target) | Payout (# of Shares) | |||||||||
Michael F. Hilton
|
|
18,400
|
|
|
185.3
|
|
|
34,095
|
| |||
Gregory A. Thaxton
|
|
4,800
|
|
|
185.3
|
|
|
8,894
|
| |||
John J. Keane
|
|
4,800
|
|
|
185.3
|
|
|
8,894
|
| |||
Gregory P. Merk
|
|
3,400
|
|
|
185.3
|
|
|
6,300
|
| |||
Jeffrey A. Pembroke
|
|
1,800
|
|
|
185.3
|
|
|
3,335
|
| |||
|
Except for excluding the financial benefits the Company received from the Tax Cuts and Jobs Act, no discretion was exercised by the Compensation Committee to increase or decrease the formulaic incentive award payouts to the named executive officers.
In-Progress Performance Share Incentive Awards
The following tables summarize the key elements and share payout amounts for the named executive officers on a cumulative basis at threshold, target, and maximum performance for the 2017-2019 and 2018-2020 Performance Share Incentive Awards.
2017-2019 Performance Share Incentive Award
Performance Measure
| Threshold
| Target
| Maximum
| |||||||||
Cumulative Diluted Earnings Per Share Growth
|
|
4%
|
|
|
8%
|
|
|
14%
|
| |||
Cumulative Revenue Growth
|
|
5%
|
|
|
7%
|
|
|
11%
|
| |||
| Grant Date |
Grant Date Share | Threshold (# Shares) | Target (# Shares) | Maximum (# Shares) | Target Earned Date | Actual Payout | ||||||
11/21/2016
|
$107.65
|
13,240
|
26,480
|
52,960
|
October 31, 2019
|
Not determined
|
2018-2020 Performance Share Incentive Award
Performance Measure |
Threshold |
Target |
Maximum | |||
Cumulative Diluted Earnings Per Share Growth
|
2%
|
8%
|
14%
| |||
Cumulative Revenue Growth
|
2%
|
5%
|
8%
|
| Grant Date |
Grant Date Share | Threshold (# Shares) | Target (# Shares) | Maximum (# Shares) | Target Earned Date | Actual Payout | ||||||||||
11/20/2017
|
$127.67
|
11,950
|
23,900
|
47,800
|
|
October 31, 2020
|
|
|
Not determined
|
| ||||||
Stock Options
Stock options align the interests of the named executive officers with those of shareholders because the stock options only have value if the price of the Company’s stock increases after the stock options are awarded. Stock options vest in 25% increments over a four-year period (on the first four anniversaries of the grant date) and generally expire ten years from the grant date. We fix the exercise price of an option at the fair market value on the grant date. Stock options are a valuable retention tool because our option awards vest over a four-year period and unvested options are forfeited if an executive officer voluntarily terminates employment.
We granted stock options to our executive officers on November 20, 2017,26, 2018, at the same time we granted stock options to other key employees under our Key Employee Stock Option Program. We have historically granted stock options during the Compensation Committee’s November meeting, which is scheduled at this time of year to permit us to verify prior fiscal year performance results, to determine incentive award payouts, and to set compensation and performance measures and goals for the next fiscal year.
The following table provides the number of stock options granted to our named executive officers for 2018:
| Named Executive Officer | Options Granted (#) |
Grant Date | ||||||
Michael F. Hilton
|
|
55,800
|
|
|
1,942,599
|
| ||
Gregory A. Thaxton
|
|
12,500
|
|
|
435,170
|
| ||
John J. Keane
|
|
12,500
|
|
|
435,170
|
| ||
Gregory P. Merk
|
|
9,000
|
|
|
313,322
|
| ||
Jeffrey A. Pembroke
|
|
8,400
|
|
|
292,434
|
| ||
|
Restricted Shares
Restricted shares are designed to align executive officers’ interestinterests with that of our long-term shareholders. The Committee also views these service-based awards as an important management succession planning, retention, and recognition tool, tying our executive officers’ compensation to the goal of increasing the value of our shareholders’ investment.shareholder interests. Restricted shares generally will vest over a three-year period and cannot be transferred until vesting. Restricted shares provide participants with dividends and voting rights beginning on the grant date.
| 48 | | Nordson Corporation – 2020 Proxy Statement |
| Base Salary |
Except for Mr. Nagarajan, during our November 26, 2018 meeting, we set individual base salaries of our named executive officers for 2019 at a level consistent with the general objective of paying total target direct compensation to approximate the median of our peer group; however, each named executive officer’s position relative to median may vary depending on a consideration of factors such as tenure, experience, future potential, internal pay equity, and performance. In setting the salaries, we considered Exequity’s input and analysis, and the recommendations of Mr. Hilton because he was the Chief Executive Officer in November 2018, when the base salaries were determined. Mr. Nagarajan’s base salary was established at the time of hire also using Exequity’s analysis of peer group data and reflects that he is new to the position and his prior executive experience and performance.
The following table reflects the annualized base salaries of our named executive officers for 2019 and 2018 (fiscal year end):
Named Executive Officer | Base Salary 2019 ($) | Base Salary 2018 ($) | Increase in Base Salary (%) | |||
Sundaram Nagarajan | 850,000 | — | — | |||
Gregory A. Thaxton | 485,000 | 470,000 | 3.2 | |||
John J. Keane | 470,000 | 455,000 | 3.3 | |||
Gregory P. Merk | 435,000 | 420,000 | 3.6 | |||
Jeffrey A. Pembroke | 432,000 | 415,000 | 4.1 | |||
Michael F. Hilton | 945,000 | 925,000 | 2.2 | |||
| Annual Cash Incentive Program |
Except for Mr. Nagarajan, the target payout opportunity, including threshold and maximum payout opportunities, for our named executive officers was established during our November 26, 2018 meeting. These metrics considered Exequity’s analysis of the peer group annual incentive opportunities. Mr. Nagarajan’s target opportunity was established at the time of hire and also used Exequity’s analysis of peer group data and reflects the same metrics that were set for Mr. Hilton by the Compensation Committee during its November 26, 2018 meeting. Mr. Nagarajan’s Annual Cash Incentive Award target was prorated and included a minimum guaranteed payout of $212,500, which represented 25% of the target annual award value and reflected his negotiated compensation.
The following table reflects the payout opportunities as a percentage of base salary:
| Incentive Amount as a Percentage (%) of Base Salary | |||||||||||||||
Named Executive Officer | Threshold | Target | Maximum | ||||||||||||
Sundaram Nagarajan* | — | 100 | 200 | ||||||||||||
Gregory A. Thaxton | 37.5 | 75 | 150 | ||||||||||||
John J. Keane | 35.0 | 70 | 140 | ||||||||||||
Gregory P. Merk | 32.5 | 65 | 130 | ||||||||||||
Jeffrey A. Pembroke | 32.5 | 65 | 130 | ||||||||||||
Michael F. Hilton | 50.0 | 100 | 200 | ||||||||||||
| * | Mr. Nagarajan’s Annual Cash Incentive payout was prorated and included a minimum guaranteed payout of $212,500. |
Nordson Corporation – 2020 Proxy Statement | | 49 |
We then established quantitative corporate financial performance measures and goals, which measures account for 50% of the Annual Cash Incentive Award payout:
Measure | Threshold | Target | Maximum | Weighting | |||||||||||||||||||||
Diluted Earnings Per Share Growth | 0 | % | 8 | % | 20 | % | 50 | % | |||||||||||||||||
Return on Total Capital | 8.0 | % | 11.5 | % | 16 | % | 50 | % | |||||||||||||||||
| * | Straight line interpolation applies to performance between designated goals. |
Operating unit performance measures and respective weighting were set through a collaborative effort between the Committee and the Chief Executive Officer:
Measure | Weighting (%) | |||||||
Revenue Growth (year-over-year) | 20 | |||||||
Operating Profit Growth (year-over-year) | 40 | |||||||
Operating Margin (as % of revenue) | 20 | |||||||
Asset Turns (% achieved) | 10 | |||||||
Days of Inventory | 10 | |||||||
Individual operating unit performance goals and results are not disclosed in this CD&A because we believe that the disclosure would result in competitive harm to us by potentially disrupting our customer, vendor and supplier relationships, and providing our competitors with insight into our business strategies beyond what is disclosed publicly. We also do not believe that the disclosure of individual operating unit performance goals and results for 2019 is material to an understanding of our 2019 executive compensation program as covered by this Proxy Statement.
Determination of Payout Amounts
Determination of the Annual Cash Incentive Award payout is atwo-step process:
Step 1: Calculation of the Payout Rate (as a % of Target) on an Actual Currency and Currency Neutral Basis
Prior to applying the currency adjustment policy as described above, the Committee first certified performance and calculated payouts as a percentage of target for the corporate financial measure:
Actual Currency — performance unadjusted for the effect of currency fluctuation, and
Currency Neutral — performance adjusted for the effect of currency fluctuation
The results are reflected in the following table:
Measure | Target Performance | Performance at Actual Currency | Payout at Actual (% of Target) | Performance at Currency Neutral | Payout Currency Neutral (% of Target) | |||||||||||||||||||||||||
Diluted Earnings Per Share Growth | $ | 6.16 | $ | 5.37 | 0.0 | * | $ | 5.64 | 0.0 | * | ||||||||||||||||||||
Return on Total Capital | 11.5% | 12.9% | 131.1 | 13.5% | 144.4 | |||||||||||||||||||||||||
Combined Corporate Factor | — | — | 65.6 | — | 72.2 | |||||||||||||||||||||||||
| * | The payout calculation for the diluted earnings per share growth measure at actual currency and currency neutral was 0.0% because performance did not meet the threshold of $5.70. |
The Committee next certified the operating units’ results, at actual currency and at currency neutral. The range of results, as a percentage of target, were:
| 50 | | Nordson Corporation – 2020 Proxy Statement |
Operating Units’ Results
Currency Calculation Method | % of Target (Range) | |||
Actual Currency | 71.5 – 86.8 | |||
Currency Neutral | 90.8 – 120.0 | |||
In calculating the corporate financial measure and operating units’ results, at actual currency and at currency neutral, the Committee did not utilize the “as reported” diluted earnings per share or return on total capital; rather it utilized a more normalized tax rate in determining the diluted earnings per share and return on total capital, which excluded the benefits inured to the Company as a result of the 2017 Tax Cuts and Jobs Act (the “Act”).
Step 2: Calculation of Payouts to Named Executive Officers Applying the Currency Adjustment Policy
Next, the Committee determined the combined factor payouts, as a percent of target, and applied the currency adjustment policy. The results are presented in the tables below:
Actual Currency
Named Executive Officer | Target Payout | Corporate (% of Target)) | Operating Unit (% of Target) | Combined Factor Payout (% of Target) |
| ||||||||||||||||||||
Sundaram Nagarajan | 212,500 | 65.6 | 76.2 | 70.9 | |||||||||||||||||||||
Gregory A. Thaxton | 363,750 | 65.6 | 76.2 | 70.9 | |||||||||||||||||||||
John J. Keane | 329,000 | 65.6 | 108.1 | 86.8 | |||||||||||||||||||||
Gregory P. Merk | 282,750 | 65.6 | 90.7 | 78.1 | |||||||||||||||||||||
Jeffrey A. Pembroke | 280,800 | 65.6 | 84.9 | 75.2 | |||||||||||||||||||||
Michael F. Hilton | 945,000 | 65.6 | 76.2 | 70.9 | |||||||||||||||||||||
Currency Neutral
Named Executive Officer | Target Payout | Corporate (% of Target) | Operating Unit (% of Target) | Combined Factor Payout (% of Target) |
| ||||||||||||||||||||
Sundaram Nagarajan | 212,500 | 72.2 | 90.8 | 81.5 | |||||||||||||||||||||
Gregory A. Thaxton | 363,750 | 72.2 | 90.8 | 81.5 | |||||||||||||||||||||
John J. Keane | 329,000 | 72.2 | 120.0 | 96.1 | |||||||||||||||||||||
Gregory P. Merk | 282,750 | 72.2 | 111.0 | 91.6 | |||||||||||||||||||||
Jeffrey A. Pembroke | 280,800 | 72.2 | 93.1 | 82.6 | |||||||||||||||||||||
Michael F. Hilton | 945,000 | 72.2 | 90.8 | 81.5 | |||||||||||||||||||||
Under our currency adjustment policy, because some of the payout calculations at actual currency were more than ten percentage points lower than the payout calculations at currency neutral rates, some of the final payouts were adjusted to be no more than ten percentage points lower than the currency neutral calculations, reflecting the Committee’s position that payouts should be affected by only the first ten percentage points of the impact of currency fluctuation.
Nordson Corporation – 2020 Proxy Statement | | 51 |
Named Executive Officer | Target Payout Opportunity ($) | Combined Factor Payout (% of Target) | Actual Payout ($) |
| ||||||||||||||||
Sundaram Nagarajan | 212,500 | * | 212,500 | |||||||||||||||||
Gregory A. Thaxton | 363,750 | 71.5 | 260,081 | |||||||||||||||||
John J. Keane | 329,000 | 86.8 | 285,572 | |||||||||||||||||
Gregory P. Merk | 282,750 | 81.6 | 230,724 | |||||||||||||||||
Jeffrey A. Pembroke | 280,800 | 75.2 | 211,162 | |||||||||||||||||
Michael F. Hilton | 945,000 | 71.5 | 675,675 | |||||||||||||||||
| * | Pursuant to Mr. Nagarajan’s employment agreement, his Annual Cash Incentive payout was predetermined at $212,500. |
Other than utilizing a more normalized tax rate and excluding the financial benefits inured to the Company by the Act, no discretion was exercised to increase or decrease the formulaic incentive award payouts to the named executive officers.
| Long Term Incentive Awards |
Performance Share Incentive Awards
During its November 21, 2016 meeting, the Committee established quantitative performance measures and goals for the 2017-2019 Performance Share Incentive Award. These measures are equally-weighted.
Measure | Threshold | Target | Maximum | |||||||||||||||||
Cumulative Diluted Earnings Per Share Growth | 4 | % | 8 | % | 14 | % | ||||||||||||||
Cumulative Revenue Growth | 5 | % | 7 | % | 11 | % | ||||||||||||||
Determination of Payout Amounts
Determination of the Performance Share Incentive Award payout is atwo-step process:
Step 1: Calculation of the Payout Rate (as a % of Target) on an Actual Currency and Currency Neutral Basis
Prior to applying the Currency Adjustment Policy described above, the Committee first certified performance for the Cumulative Earnings per Share Growth and Cumulative Revenue measures:
Actual Currency – performance unadjusted for the effect of currency fluctuation, and
Currency Neutral – performance adjusted for the effect of currency fluctuation
Following this certification process, the Committee calculated the payouts as a percent of target. The results are reflected in the following table:
Measures | Target Performance | Performance at Actual Currency | Payout at (% of Target) | Performance at Currency Neutral | Payout at Currency Neutral (% of Target) | |||||||||||||||||||||||||
Cumulative Diluted Earnings per Share Growth | $ | 16.48 | $ | 16.15 | 41.2 | % | $ | 15.93 | 36.7 | % | ||||||||||||||||||||
Cumulative Revenue | $ | 6,222.9 | * | $ | 6,515.9 | * | 80.0 | % | $ | 6,503.3 | * | 78.7 | % | |||||||||||||||||
Combined Factor | 121.2 | % | 115.4 | % | ||||||||||||||||||||||||||
| * | millions |
In calculating the performance share results for 2019 and 2018, the Committee did not utilize the “as reported” diluted earnings per share for each respective year; rather, it utilized a more normalized effective tax rate in determining the diluted earnings per share for 2019 and 2018, which excluded the benefits inured to the Company as a result of the Act. The Committee determined this adjustment reflected more accurately the intent of the Committee when it set the three-year, cumulative performance standards during its November 2016 meeting, which was before the Act was passed.
| 52 | | Nordson Corporation – 2020 Proxy Statement |
Step 2: Calculation of Payouts to Named Executive Officers Applying the Currency Adjustment Policy
Under the currency adjustment policy, because the difference between the two payout percentage rates is equal to or less than +/- 10 percentage points, the final payouts for the 2017-2019 performance period are based on the calculation at actual currency rates, with no adjustments:
Named Executive Officer | Target Payout (# of Shares) | Post-Currency (% of Target) | Payout (# of Shares) |
| ||||||||||||||||
Sundaram Nagarajan | 2,198 | 121.2 | 2,664 | |||||||||||||||||
Gregory A. Thaxton | 3,600 | 121.2 | 4,363 | |||||||||||||||||
John J. Keane | 3,600 | 121.2 | 4,363 | |||||||||||||||||
Gregory P. Merk | 2,700 | 121.2 | 3,272 | |||||||||||||||||
Jeffrey A. Pembroke | 1,680 | 121.2 | 2,036 | |||||||||||||||||
Michael F. Hilton | 14,900 | 121.2 | 18,059 | |||||||||||||||||
At the time of his hire, the Committee determined that Mr. Nagarajan’s 2017-2019 Performance Share Incentive Award target payout opportunity would be the number of shares equal to $300,000, or 2,198 shares, which was determined by using the specified economic grant date value and the most recent fiscal quarter closing average price share of Nordson common stock immediately preceding the hire date and rounding to the nearest whole share.
Other than utilizing a more normalized tax rate and excluding the financial benefits inured to the Company by the Act in calculating the diluted earnings per share for 2019 and 2018, no discretion was exercised by the Committee to increase or decrease the formulaic incentive award payouts to the named executive officers.
In-Progress Performance Share Incentive Awards
The following tables summarize the key elements and share payout opportunities for the named executive officers on a cumulative basis at threshold, target, and maximum performance for the 2018-2020 and 2019-2021 Performance Share Incentive Awards.
2018-2020 Performance Share Incentive Award
Performance Measure | Threshold | Target | Maximum | |||||||||||||||||
Cumulative Diluted Earnings Per Share Growth | 2 | % | 8 | % | 14 | % | ||||||||||||||
Cumulative Revenue Growth | 2 | % | 5 | % | 8 | % | ||||||||||||||
Grant Date | Grant Date Share | Threshold (# Shares) | Target (# Shares) | Maximum (# Shares) | Target Earned Date | Actual Payout | ||||||
11/20/2017 | $127.67 | 11,950 | 23,900 | 47,800 | October 31, 2020 | Not determined | ||||||
08/01/2019 (Nagarajan only) | $138.53 | 1,978 | 3,956 | 7,912 | October 31, 2020 | Not determined | ||||||
Nordson Corporation – 2020 Proxy Statement | | 53 |
2019-2021 Performance Share Incentive Award
Performance Measure | Threshold | Target | Maximum | |||||||||
Cumulative Diluted Earnings Per Share Growth | 2 | % | 8 | % | 14 | % | ||||||
Cumulative Revenue Growth | 2 | % | 5 | % | 8 | % | ||||||
Grant Date | Grant Date Share | Threshold (# Shares) | Target (# Shares) | Maximum (# Shares) | Target Earned Date | Actual Payout | ||||||
11/26/2018 | $124.90 | 11,450 | 22,900 | 45,800 | October 31, 2021 | Not determined | ||||||
08/01/2019 (Nagarajan only) | $138.53 | 2,784 | 5,567 | 11,134 | October 31, 2021 | Not determined | ||||||
Stock Options
Except for Mr. Nagarajan, we granted stock options to our executive officers on November 26, 2018, at the same time we granted stock options to other key employees under our Key Employee Stock Option Program. We have historically granted stock options during the Compensation Committee’s November meeting, which is scheduled at the same time this year, to permit us to verify prior fiscal year performance results, to determine incentive award payouts, and to set compensation and performance measures and goals for the next fiscal year. We did not grant stock options to Mr. Nagarajan in 2019.
The following table provides information regarding the stock options granted to our named executive officers for 2019:
Named Executive Officer | Options Granted (#) | Grant Date Fair Value ($) (1) | ||||||||||
Sundaram Nagarajan | None | — | ||||||||||
Gregory A. Thaxton | 11,800 | 392,342 | ||||||||||
John J. Keane | 11,700 | 389,017 | ||||||||||
Gregory P. Merk | 8,800 | 292,594 | ||||||||||
Jeffrey A. Pembroke | 8,300 | 275,969 | ||||||||||
Michael F. Hilton | 51,400 | 1,709,014 | ||||||||||
| (1) | The grant date fair value was determined using the Black-Scholes option pricing model on the date of grant. The actual value of stock option awards will be determined by the value of our common shares on the date of exercise. |
Restricted Shares
Except for Mr. Nagarajan, we granted restricted shares to executive officers on November 20, 2017.26, 2018. The share price on the grant date was the closing price on November 20, 201726, 2018 – $127.67. $124.90 for named executive officers. We did not grant restricted shares to Mr. Nagarajan in 2019.
| 54 | | Nordson Corporation – 2020 Proxy Statement |
The following table provides information regarding the 2018 restricted share awards:awards granted to our named executive officers for 2019:
| Named Executive Officer |
Restricted | Grant Date Value ($) | Restricted Shares Granted (#) | Grant Date Value ($) | ||||||||
Sundaram Nagarajan | — | — | ||||||||||
Gregory A. Thaxton | 1,500 | 187,350 | ||||||||||
John J. Keane | 1,500 | 187,350 | ||||||||||
Gregory P. Merk* | 1,100 | 137,390 | ||||||||||
Jeffrey A. Pembroke* | 1,000 | 124,900 | ||||||||||
Michael F. Hilton
|
|
6,700
|
|
|
855,389
|
| 6,400 | 799,360 | ||||
Gregory A. Thaxton
|
|
1,600
|
|
|
204,272
|
| ||||||
John J. Keane
|
|
1,600
|
|
|
204,272
|
| ||||||
Gregory P. Merk
|
|
1,200
|
|
|
153,204
|
| ||||||
Jeffrey A. Pembroke
|
|
1,000
|
|
|
127,670
|
| ||||||
| * | ||
|
Retention Awards
PART IV: OTHER COMPONENTS OF OUR EXECUTIVE COMPENSATION PROGRAMOther Components of our Executive Compensation Program
In addition to base salary, the Annual Cash Incentive Award, and long-term equity-based incentive awards, we offer other forms of compensation, including: (i) executive perquisites; (ii) welfare and retirement benefits; and(iii) change-in-control benefits.
Executive Perquisites
We provide limited and modest perquisites to each of our executive officers to promote the business objectives described below. We also use these perquisites to provide a competitive executive compensation program, which allows us to attract and retain top executive talent.
| • | Business Clubs. We do not reimburse any executive officer for fees or dues associated with personal country club memberships. We |
| • | Financial, Estate, and Tax Planning and Preparation. We pay for financial, estate, and tax planning and preparation fees and expenses. The maximum amount is $5,000 for each named executive officer per calendar year. We provide this perquisite to assist our executive officers in obtaining financial counseling, enabling them to concentrate on business matters rather than on personal financial planning. Pursuant to Mr. Nagarajan’s employment agreement, we paid $12,390 for attorneys’ fees incurred in reviewing Mr. Nagarajan’s employment contract. In addition, pursuant to the amendment to Mr. Hilton’s employment agreement, we paid $2,560 for attorneys’ fees incurred in reviewing the amendment. |
| • | Executive Physicals. We pay for annual physicals for our executive officers. We provide this benefit to preserve our investment in our executive officers by encouraging them to maintain healthy lifestyles and be proactive in their preventative healthcare. |
| • | Relocation Expense Reimbursement. We maintain a general relocation policy under which the Company provides reimbursement for certain relocation expenses to new employees and to employees whose job |
Nordson Corporation – 2020 Proxy Statement | | 55 |
function requires relocation. We believe it is important to maintain market competitive relocation benefits in order to fill positions that are critical to Nordson’s business needs. Mr. Nagarajan’s relocation assistance included the incremental cost paid or incurred by us for Mr. Nagarajan’s relocation from Illinois to Ohio, including home sale and home repurchase assistance, shipment of household goods, duplicate housing costs, lump sum relocation allowance and $100,000 for the cash loss on the sale of his primary residence based on the original purchase price. The cash loss of $100,000 was grossed up for tax purposes. |
Welfare and Retirement Benefits
The following summarizes the welfare and retirement benefits available to our named executive officers:
Qualified Defined Contribution 401(k) Plan |
• Our executive officers are eligible to participate in a Company-sponsored 401(k)tax-qualified retirement savings plan for all U.S.-based employees.
• We match employee contributions $0.50 on the dollar for the first 6% of contributed compensation. Employee contributions to the 401(k) Plan vest immediately, while matching contributions vest in increments based on years of service, with participants being fully vested after three years of service.
|
| Non-Qualified Deferred Compensation Plan |
• We maintain anon-qualified, unfunded, and unsecured deferred compensation plan for the benefit of eligible management employees whose benefits under the 401(k) Plan are limited by the benefit restrictions of Section 415 of the Internal Revenue Code.
• Participants are able to defer up to 100% of their base salary and Annual Cash Incentive Award payout, and up to 90% of their Performance Share Incentive Award payout.
|
| Defined Benefit Pension Plan |
• Our executive officers participate in a Company-sponsoredtax-qualified pension plan for U.S.-based salaried employees. The pension plan is designed to work together with social security benefits to provide employees with 30 years of service retirement income that is approximately 55% of eligible compensation, subject to the Internal Revenue Code maximum monthly benefit.
|
| Excess Defined Benefit Pension Plan |
• We maintain a supplemental executive retirement benefit restoration plan which is an unfunded,non-qualified plan that is designed to provide retirement benefits to U.S.-based eligible participants as a replacement for those retirement benefits limited by regulations under the Internal Revenue Code.
• Together, the defined benefit pension plan and excess defined benefit pension plan are intended to provide executive officers with retirement income at a level equivalent to that provided to other employees under the defined benefit pension plan.
• Additionally, pursuant to the employment agreement that was negotiated at the time he was hired as CEO, Mr. Nagarajan is entitled to an individual nonqualified pension benefit (the “Supplemental Individual Pension Benefit”), which will make up for benefits that he may forfeit under ourtax-qualified defined benefit pension plan if his employment terminates prior to vesting under the pension plan in certain circumstances. In particular, the Supplemental Individual Pension Benefit will treat Mr. Nagarajan as if he were fully vested in ourtax-qualified defined benefit pension plan, solely in the event of his death, disability, involuntary termination without cause or termination for good reason (whether or not in connection with an change in control of Nordson), prior to becoming 100% vested under the pension plan.
|
| 56 | | Nordson Corporation – 2020 Proxy Statement |
Severance Agreements
Mr.Messrs. Nagarajan and Hilton isare the only executive officers for which we have any obligation to pay severance other than following achange-in-control.2 As part of the negotiated employment agreementagreements with Mr.Messrs. Hilton and consistent with an agreement we had with his predecessor,Nagarajan, we agreed to provide Mr. Hiltoneach with a cash severance and other benefits in the event histheir respective employment is terminated by us without “Cause” or Mr. Hiltoneither terminates his employment with us for “Good Reason” (each such term as defined in Mr. Hilton’sthe respective employment agreement)agreements).
Upon a termination by us without Cause or by Mr. HiltonNagarajan for Good Reason, in addition to payment of any accrued and unpaid compensation and benefits, Mr. Hilton isNagarajan would be entitled to post-termination payments and benefits as follows:
a lump sum cash payment equal to two (2) times the sum of his annual base salary and his target cash incentive opportunity;
apro-rata payout of his Annual Cash Incentive Award, based on actual performance;
apro-rata payout of long-term performance share awards granted to Mr. Nagarajan for any performance period(s) not completed on the date of termination, based upon actual performance in each such applicable performance period, as determined at the end of the applicable performance period;
continuation of vesting for stock options in accordance with the normal vesting schedule;
full vesting of restricted share awards; and
continuation of health care and welfare benefits for a period of twenty-four (24) months following the date of termination;
immediate vesting of Mr. Nagarajan’s benefits under the Supplemental Individual Pension Benefit, if the triggering event occurs within the first five years of his employment.
We will notgross-up any tax imposed upon any payment received by Mr. Nagarajan under his employment agreement.
Our obligation to Mr. Hilton, had there been a termination by us without Cause or by Mr. Hilton for Good Reason prior to his retirement from the Company, in addition to payment of any accrued and unpaid compensation and benefits, would have been post-termination payments and benefits as follows:
an amount equal to two (2) times the sum of his annual base salary and the greater of (x) ninety percent (90%) of his annual base salary or (y) his target cash incentive opportunity;
|
apro-rata payout of his Annual Cash Incentive Award, based on actual performance;
apro-rata payout of long-term performance share awards granted to Mr. Hilton for any performance period(s) not completed on the date of termination, based upon actual performance in each such applicable performance period, as determined at the end of the applicable performance period;
full vesting of restricted share awards; and
continuation of health care and welfare benefits for a period of twenty-four (24) months following the date of termination.
We willwould not have providedgross-up of any tax imposed upon any payment that would have been received by Mr. Hilton under his employment agreement.Hilton.
| 2 | The Company’s obligations to Mr. Hilton under his employment agreement, including the terms of severance, ceased as of December 31, 2019 in connection with his retirement. |
Nordson Corporation – 2020 Proxy Statement | | 57 |
Change-in-Control
We believe that the occurrence, or potential occurrence, of achange-in-control transaction in which we are the target could create substantial uncertainty regarding the continued employment of our executive officers. Therefore, we have entered intochange-in-control retention agreements with our executive officers that provide severance and other benefits in the event of a qualifying termination following achange-in-control. The primary purpose of these agreements is to keep senior executives focused on pursuing all corporate transaction activity that is in the best interests of shareholders, regardless of whether those transactions may result in their own job loss. The Committee has determined thatchange-in-control retention agreements executed after November 1, 2015, including the agreement executed with Mr. Nagarajan, will not provide for“gross-up” payments to cover any federal excise taxes that may be owed onchange-in-control severance payments and benefits.Change-in-control retention agreements executed prior to November 1, 2015, which do provide for agross-up for any excess federal excise taxes that may be owed on change in control-related severance payments and benefits, remain in effect.
Severance and Other Benefits
Severance benefits payable underchange-in-control retention agreements are conditioned upon the occurrence of a “double trigger” event (meaning there must be both achange-in-control of the Company and, within the following 24 months, a termination of employment by either the Company without Cause, or by the officer for Good Reason, as defined in the respectivechange-in-control retention agreements). We opted for a double-trigger, rather than a “single trigger” that provides for severance payments solely on the basis of achange-in-control, sincebecause a double trigger is consistent with the purpose of encouraging the continued employment of the executive following achange-in-control.
In the event of achange-in-control and a qualifying termination of employment, an executive officer will be entitled to receive:
accrued but unpaid compensation, including apro-rata payout of the Annual Cash Incentive Award;
a lump sum cash payment in an amount equal to two (2) times the sum of (x) annual base salary in effect at the time of termination of employment plus (y) target Annual Cash Incentive Award opportunity for the year in which termination of employment occurs;
continuation of coverage for the executive officer and his or her eligible spouse and dependents under the Company’s group health plans, life insurance, accidental death and dismemberment, pension, disability and tax and financial planning plans for the lesser of 24 months following termination of employment or until the date he or she becomes covered under similar benefit plans;
professional outplacement services; and
two additional years of age and two additional years of service credit under the Company-sponsored qualified andnon-qualified pension plans, the benefit being paid from the Excess Defined Benefit Pension Plan.
Treatment of Share-based Awards
To provide our executive officers with the same opportunity as our shareholders to realize the value created by achange-in-control, the shareholder-approved Amended and Restated 2012 Nordson Corporation Share and Incentive Award Plan historically has provided for full vesting of all outstanding share-based Awardsawards upon achange-in-control. However, effective for awards granted under that plan after December 27, 2017, equity awards generally will vest on a “double-trigger” basis, in the event of achange-in-control and a qualifying termination of the participant’s employment.
| 58 | | Nordson Corporation – 2020 Proxy Statement |
Additional Compensation Policies
We require share ownership by our executive officers to emphasize our executive compensation program’s objective of aligning the individual financial interests of our executive officers with the investment interests of our long-term shareholders. We require our executive officers to own the following multiples of base salary in the equivalent number of common shares:
| Chief Executive Officer | 5 times base salary | |||
| President (other than the Chief Executive Officer) | 3 times base salary | |||
| Chief Financial Officer | 3 times base salary | |||
| Other Executive Officers | 2 times base salary | |||
The number of shares required to be held varies according to our common share price movement. Newly elected executive officers will have up to five years to meet the ownership requirements after their election.
Executive officers who have not satisfied the share ownership requirements by the end of the five-year period or who have not shown progress (as subjectively determined by the Committee) toward the required ownership level prior to the end of such five-year period will be expected to retain 100% of the shares acquired through exercise of options, lapse of transfer restrictions on restricted shares or Performance Share Incentive Award payouts, net of shares withheld to cover the taxes due, until the share ownership requirement is achieved or there is progress towards the ownership requirement. We review the share ownership of each executive officer compared to the applicable share ownership guidelines, including the number of vested stock options, share equivalent units in deferred compensation plans and share ownership in the Nordson Corporation Employee Stock Ownership Plan and 401(k) Plan, each of which count as valid forms of share ownership under the ownership guidelines. As of October 31, 2019, all named executive officers met or exceeded their respective ownership guidelines.
Anti-Pledging/Anti-Hedging Policy
We prohibit directors and executive officers from pledging Nordson common shares as collateral. Also prohibited are trading in derivative securities of Nordson’s common shares, engaging in short sales of Nordson securities, or purchasing any other financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to hedge or offset any decrease in the market value of Nordson securities. At this time, we do not prohibit other employees from pledging Nordson common shares as collateral.
The Committee takes into account the tax and accounting treatment of executive compensation arrangements when structuring our executive compensation program. One of those considerations is Section 162(m) of the Internal Revenue Code, which sets a limit of $1 million on the amount we can deduct for compensation paid to our “covered employees”. Historically, compensation meeting the requirements of “qualified performance-based compensation” under Section 162(m) did not count toward the $1 million limit. However, the Tax Cuts and Jobs Act, which was enacted on December 22, 2017 (the “Act”), made a number of changes to Section 162(m), generally effective for taxable (fiscal) years beginning after December 31, 2017, including the repeal of the “qualified performance-based compensation” exemption and the expansion of the definition of “covered employees” (for example, by including both the chief financial officer and certain former named executive officers as covered employees).
Prior to the Act, our general philosophy had been to attempt to qualify compensation for tax deductibility under Section 162(m) of the Internal Revenue Code, wherever we deemed appropriate, recognizing that, under certain circumstances, the limitations may be exceeded. Historically, treatment as “qualified performance-based compensation” was sought to the extent practicable and only to the extent that it was consistent with our overall compensation objectives. However, due to uncertainties regarding the scope of relief under the Act, there can be no guarantee that any compensation paid to our covered employees in excess of $1 million will be or remain exempt from Section 162(m).
Nordson Corporation – | | |
In any event, the Committee retains full discretion to construct compensation packages that will best attract, retain, and reward successful executive officers. Therefore, the Committee may award compensation that is not fully deductible under Section 162(m) if the Committee believes it will contribute to the achievement of our business objectives.
PART V: POLICIES RELATED TO EXECUTIVE COMPENSATION
Equity AwardGrant Policy
We grant equity on a consistent schedule, generally at the first Committee meeting following the end of the fiscal year. We do not grant performance share units, stock options, or restricted shares to our executive officers in anticipation of the release of significant earnings announcements or other materialnon-public information likely to result in changes to the price of our common shares. Similarly, we do not time the release of materialnon-public information based on equity award grant dates. Awards generally are effective on the date that we grant the award. The Committee may also make occasional grants of stock options and other equity-based awards at other times to recognize, retain or recruit executive officers and key employees. We have delegated limited authority to Mr. Hiltonthe Chief Executive Officer to grant equity awards, excluding awards made to executive officers. Equity awards granted by Mr. Hiltonthe Chief Executive Officer in any quarter will be effective the first day of the month following public disclosure of quarterly earnings for that quarter.
Incentive Compensation Forfeiture (Clawback) Policy
We have a formal “clawback” policy for incentive awards that is broader in its reach than that imposed by Section 304 of the Sarbanes-Oxley Act. Under the policy, we may require our executive officers to repay cash-based incentive compensation and/or equity incentive awards in the event of a material restatement of the consolidated financial statements of the Company, other than any restatement required pursuant to a change in applicable accounting rules. Recovery is limited to amounts paid or realized by an executive officer during the three-year period preceding the date that we are required to prepare a restatement.
Additionally, our Board of Directors, upon the Committee’s recommendation, may, to the extent permitted by law and to the extent it determines that it is in our best interests to do so, require reimbursement or payment by the executive officer to the Company of equity-based compensation and performance-based compensation in an amount determined by the Board of Directors to be attributable to: (i) conduct that violates our Code of Ethics and Business Conduct, or (ii) willful misconduct or fraud that causes harm to the Company.
The Committee will revise the policy as appropriate once final rules are issued under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Share Ownership Guidelines
We require share ownership by our executive officers to emphasize our executive compensation program’s objective of aligning the individual financial interests of our executive officers with the investment interests of our long-term shareholders. We require our executive officers to own the following multiples of base salary in the equivalent number of common shares:
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| |
| ||
|
|
The number of shares required to be held varies according to our common share price movement. Newly elected executive officers will have up to five years to meet the ownership requirements after their election.
Executive officers who have not satisfied the share ownership requirements by the end of the five-year period or who have not shown progress (as subjectively determined by the Committee) toward the required ownership level prior to the end of such five-year period will be expected to retain 100% of the shares acquired through exercise of options, lapse of transfer restrictions on restricted shares or
| Nordson Corporation – |
Performance Share Incentive Award payouts, net of shares withheld to cover the taxes due, until the share ownership requirement is achieved or there is progress towards the ownership requirement. We review the share ownership of each executive officer compared to the applicable share ownership guidelines, including the number of vested stock options, share equivalent units in deferred compensation plans and share ownership in the Nordson Corporation Employee Stock Ownership Plan and 401(k) Plan, each of which count as valid forms of share ownership under the ownership guidelines. As of October 31, 2018, all named executive officers, except Jeffrey Pembroke, met or exceeded their respective ownership guidelines. Mr. Pembroke was named an executive officer in November 2015 and is required to meet the share ownership requirement by November 2020.
Anti-Pledging/Anti-Hedging Policy
We prohibit directors and executive officers from pledging Nordson common shares as collateral. Also prohibited are trading in derivative securities of Nordson’s common shares, engaging in short sales of Nordson securities, or purchasing any other financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to hedge or offset any decrease in the market value of Nordson securities.
Tax and Accounting Treatment of Executive Compensation
The Committee takes into account the tax and accounting treatment of executive compensation arrangements when structuring our executive compensation program. One of those considerations is Section 162(m) of the Internal Revenue Code, which sets a limit of $1 million on the amount we can deduct for compensation paid to our “covered employees”. Historically, compensation meeting the requirements of “qualified performance-based compensation” under Section 162(m) did not count toward the $1 million limit. However, the Tax Cuts and Jobs Act, which was enacted on December 22, 2017, made a number of changes to Section 162(m), generally effective for taxable (fiscal) years beginning after December 31, 2017, including the repeal of the “qualified performance-based compensation” exemption and the expansion of the definition of “covered employees” (for example, by including both the chief financial officer and certain former named executive officers as covered employees).
Our general philosophy has been to attempt to qualify compensation for tax deductibility under Section 162(m) of the Internal Revenue Code, wherever we deem appropriate, recognizing that, under certain circumstances, the limitations may be exceeded. Historically, treatment as “qualified performance-based compensation” has been sought to the extent practicable and only to the extent that it is consistent with our overall compensation objectives. However, due to uncertainties regarding the scope of relief under the Tax Cuts and Jobs Act, there can be no guarantee that any compensation paid to our covered employees in excess of $1 million will be or remain exempt from Section 162(m).
In any event, the Committee retains full discretion to construct compensation packages that will best attract, retain, and reward successful executive officers. Therefore, the Committee may award compensation that is not fully deductible under Section 162(m) if the Committee believes it will contribute to the achievement of our business objectives. Moreover, given the nature of the changes to Section 162(m) under the recent Tax Cuts and Jobs Act, the Compensation Committee expects that, after Nordson’s 2018 fiscal year, thetax-deductible portion of our executive compensation program will decrease.
|
We have reviewed and discussed with management the Compensation Discussion and Analysis that appears in this Proxy Statement. Based on such review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s definitive Proxy Statement on Schedule 14A and incorporated by reference into the Company’s 20182019 Annual Report, each as filed with the SEC.
Compensation Committee,
Mary G. Puma, Chair
Lee C. Banks
Michael J. Merriman, Jr.
Victor L. Richey, Jr.
January 18, 201917, 2020
The above Compensation Committee Report does not constitute soliciting material and should not be deemed filed with the SEC or subject to Regulation 14A or 14C (other than as provided in Item 407 of RegulationS-K) or to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that the information in this Report be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act. If this Report is incorporated by reference into the Company’s Annual Report on Form10-K, such disclosure will be furnished in such Annual Report on Form10-K and will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act as a result of furnishing the disclosure in this manner.
Nordson Corporation – | | 61 |
RISKS RELATED TO EXECUTIVE COMPENSATION POLICIES AND PRACTICES
The Committee believes that the design of the executive compensation program as outlined in the “Compensation Discussion and Analysis” above places emphasis on long-term incentives and competitive base salaries. While the Annual Cash Incentive Award is tied to short-term performance, the Committee concluded that emphasis on long-term incentives appropriately balances risk and management’s motivations for our long-term success, including share price performance, with the interests of our long-term shareholders. Although our executive compensation program is designed topay-for-performance pay for performance and provide incentive-based compensation, the incentive-driven elements of our executive compensation program contain various mitigating features that are designed to discourage management from taking unnecessary risks in managing the business that could maximize short-term results at the expense of long-term value.
The Committee has the authority to set performance measures and goals, monitor performance, and to exercise negative discretion in determining incentive award payouts to our executive officers.
We believe that our compensation policies and practices do not encourage our executive officers to take excessive or unnecessary risks and are not reasonably likely to have a material adverse effect on the Company.
The table below summarizes the risk mitigation factors applicable to the primary elements of the Company’s executive compensation program.
Base Salary Risk Mitigation Factors |
Fixed Amount. Base salary does not encourage risk-taking as it is a fixed amount.
Small Percentage of Total Compensation. Base salary is a relatively small percentage of total direct compensation for executive officers.
|
| Annual Cash Incentive Award Risk Mitigation Factors |
Multiple Performance Factors. The Annual Cash Incentive Award features multiple quantitative performance measures that encourage executives to focus on the overall strength of the business rather than a single financial measure.
Award Cap. Awards payable to any individual are capped.
Management Processes. Board and management processes are in place to oversee risks associated with the Annual Cash Incentive Award, including, but not limited to, monthly and quarterly business performance reviews by management and regular business performance reviews by the Board of Directors and the Audit Committee.
Clawback Provision. Robust forfeiture (“clawback”) terms accompany cash-based incentive awards for our executive officers.
|
| Long-Term Equity Compensation Risk Mitigation Factors |
Share Ownership Guidelines. Share ownership guidelines align the executive interests with those of our long-term shareholders.
Vesting Schedule Overlaps. The vesting schedules for long-term incentives overlap and, therefore, reduce an executive officer’s motivation to maximize performance in any one period.
Service-based Vesting. Service-based vesting aligns with long-term shareholder interests.
Anti-Hedging/Anti-Pledging Policy. The Company’s anti-hedging policy prohibits directors and our executive officers from purchasing any financial instrument that is designed to hedge or offset any decrease in the market value of our common stock, including prepaid variable forward contracts, equity swaps, collars, and exchange funds. Our anti-pledging policy prohibits our directors and executive officers from pledging our common stock as collateral.
Clawback Provision. Robust forfeiture (“clawback”) terms accompany equity-based awards for our executive officers. |
62 | | Nordson Corporation – |
SUMMARY COMPENSATION FOR FISCAL YEAR 20182019
All references in this section to years are references to fiscal years unless otherwise noted. Our fiscal year ends October 31.
The following narratives, tables, footnotes, and supplemental tables present the components of compensation for our named executive officers for the fiscal year ended October 31, 2018.2019. The individual components of the compensation reflected in the Summary Compensation Table (“SCT”) for 20182019 and the prior two fiscal years are:
Salary. Base salary earned by a named executive officer. Any amount of base salary deferred by a named executive officer is identified in footnote 1 to the“Non-Qualified Deferred Compensation” table.
Bonus. We did not award any discretionary cash bonus to any named executive officer.
| • | Salary. Base salary earned by a named executive officer. Any amount of base salary deferred by a named executive officer is identified in footnote 1 to the“Non-Qualified Deferred Compensation” table. |
| • | Bonus. We did not award any discretionary cash bonus to any named executive officer. |
| • | Stock Awards. The awards disclosed in the “Stock Awards” column consist of restricted share awards and performance share awards for the 2019-2021, 2018-2020, |
Option Awards. The awards disclosed in the “Option Awards” column consist of option awards for our common stock. The award amounts represent the grant date fair value of stock options as calculated under FASB ASC Topic 718. Details about the option awards made during 2018 are included in the narrative accompanying the “Grants of Plan-Based Awards” table.
| • | Option Awards. The awards disclosed in the “Option Awards” column consist of option awards for our common stock. The award amounts represent the grant date fair value of stock options as calculated under FASB ASC Topic 718. Details about the option awards made during 2019 are included in the narrative accompanying the “Grants of Plan-Based Awards” table. |
Non-Equity Incentive Plan Compensation. The amounts disclosed under the“Non-Equity Incentive Plan Compensation” column represent compensation earned under the Annual Cash Incentive Award. Further information concerning the Annual Cash Incentive Award may be reviewed in Part III of the Compensation Discussion and Analysis section of this Proxy Statement under the caption “Key Components of Our Executive Compensation Program.”
| • | Non-Equity Incentive Plan Compensation. The amounts disclosed under the“Non-Equity Incentive Plan Compensation” column represent compensation earned under the Annual Cash Incentive Award. Further information concerning the Annual Cash Incentive Award may be reviewed in the Compensation Discussion and Analysis section of this Proxy Statement under the caption “Elements of Compensation.” |
Change in Pension Value andNon-Qualified Deferred Compensation Earnings. The amounts disclosed in the “Change in Pension Value andNon-Qualified Deferred Compensation Earnings” column represent any actuarial increase during the fiscal year in the pension value provided under our qualified defined benefit pension plan andnon-qualified excess defined benefit pension plan. We do not pay above-market or preferential rates on thenon-qualified deferred compensation of our named executive officers. A narrative discussion of our defined benefit pension plan and excess defined benefit pension plan accompanies the “Pension Benefits” table.
| • | Change in Pension Value andNon-Qualified Deferred Compensation Earnings. The amounts disclosed in the “Change in Pension Value andNon-Qualified Deferred Compensation Earnings” column represent any actuarial increase during the fiscal year in the pension value provided under our qualified defined benefit pension plan andnon-qualified excess defined benefit pension plan. We do not pay above-market or preferential rates on thenon-qualified deferred compensation of our named executive officers. A narrative discussion of our defined benefit pension plan and excess defined benefit pension plan accompanies the “Pension Benefits” table. |
All Other Compensation. The amounts disclosed in the “All Other Compensation” column include the combined value of each named executive officer’s perquisites, our matching contributions to the qualified deferred compensation 401(k) plan andnon-qualified deferred compensation plan and other noted payments.
| • | All Other Compensation. The amounts disclosed in the “All Other Compensation” column include the combined value of each named executive officer’s perquisites, our matching contributions to the qualified deferred compensation 401(k) plan andnon-qualified deferred compensation plan and other noted payments. |
Nordson Corporation – | | 63 |
In this section we provide certain tabular and narrative information regarding the compensation of our principal executive and financial officers and our three other most highly compensatednamed executive officers for 2018.2019.
Name and Principal Position
| Fiscal
| Salary (1) $
| Bonus
| Stock (2) $
| Option
| Non-Equity
| Change in & Non-
| All Other
| Total $
| |||||||||||||||||||||||||||
Michael F. Hilton | 2018 | 925,000 | — | 2,509,619 | 1,942,599 | 1,082,250 | 454,746 | 82,876 | 6,997,090 | |||||||||||||||||||||||||||
President and Chief | 2017 | �� | 875,000 | — | 2,347,868 | 1,829,045 | 1,103,375 | 505,485 | 87,542 | 6,748,315 | ||||||||||||||||||||||||||
Executive Officer
|
| 2016
|
|
| 850,000
|
|
| —
|
|
| 1,897,868
|
|
| 1,416,040
|
|
| 1,380,400
|
|
| 775,637
|
|
| 108,904
|
|
| 6,428,849
|
| |||||||||
Gregory A. Thaxton | 2018 | 470,000 | — | 586,967 | 435,170 | 384,930 | 47,260 | 37,854 | 1,962,181 | |||||||||||||||||||||||||||
Executive Vice President, | 2017 | 450,000 | — | 567,270 | 423,951 | 397,215 | 407,504 | 42,123 | 2,288,063 | |||||||||||||||||||||||||||
Chief Financial Officer
|
| 2016
|
|
| 435,000
|
|
| —
|
|
| 495,096
|
|
| 334,559
|
|
| 494,508
|
|
| 618,576
|
|
| 41,600
|
|
| 2,419,339
|
| |||||||||
John J. Keane | 2018 | 455,000 | — | 586,967 | 435,170 | 339,203 | — | 32,662 | 1,848,855 | |||||||||||||||||||||||||||
Executive Vice President | 2017 | 435,000 | — | 567,270 | 423,951 | 395,850 | 161,304 | 38,577 | 2,021,952 | |||||||||||||||||||||||||||
|
| 2016
|
|
| 420,000
|
|
| —
|
|
| 495,096
|
|
| 334,559
|
|
| 448,056
|
|
| 473,781
|
|
| 43,015
|
|
| 2,214,507
|
| ||||||||||
Gregory P. Merk | 2018 | 420,000 | — | 430,967 | 313,322 | 337,428 | — | 24,764 | 1,394,239 | |||||||||||||||||||||||||||
Executive Vice President | 2017 | 403,000 | — | 425,453 | 302,822 | 351,799 | 364,368 | 23,766 | 1,871,208 | |||||||||||||||||||||||||||
|
| 2016
|
|
| 380,000
|
|
| —
|
|
| 350,693
|
|
| 260,645
|
|
| 411,996
|
|
| 483,320
|
|
| 26,570
|
|
| 1,913,224
|
| ||||||||||
Jeffrey A. Pembroke | 2018 | 415,000 | — | 380,743 | 292,434 | 389,789 | 37,374 | 38,794 | 1,554,134 | |||||||||||||||||||||||||||
Executive Vice President | ||||||||||||||||||||||||||||||||||||
Name and Principal Position | Fiscal Year | Salary(1) $ | Bonus $ | Stock Awards(2) $ | Option Awards(3) $ | Non-Equity Incentive Plan Compensation(4) $ | Change in & Non- $ | All Other $ | Total $ | |||||||||||||||||||||||||||
Sundaram Nagarajan President and Chief Executive Officer | 2019 | 212,500 | — | 788,621 | — | 212,500 | 69,136 | 241,066 | 1,523,824 | |||||||||||||||||||||||||||
| 2018 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| 2017 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Gregory A. Thaxton Executive Vice President and Chief Financial Officer
|
| 2019 |
|
| 485,000 |
|
| — |
|
| 547,710 |
|
| 392,342 |
|
| 260,081 |
|
| 1,679,874 |
|
| 50,994 |
|
| 3,416,001 |
| |||||||||
| 2018 |
|
| 470,000 |
|
| — |
|
| 586,967 |
|
| 435,170 |
|
| 384,930 |
|
| 47,260 |
|
| 37,854 |
|
| 1,962,181 |
| ||||||||||
| 2017
|
|
| 450,000
|
|
| —
|
|
| 567,270
|
|
| 423,951
|
|
| 397,215
|
|
| 407,504
|
|
| 42,123
|
|
| 2,288,063
|
| ||||||||||
John J. Keane Executive Vice President | 2019 | 470,000 | — | 547,710 | 389,017 | 285,572 | 1,452,191 | 47,895 | 3,192,385 | |||||||||||||||||||||||||||
| 2018 | 455,000 | — | 586,967 | 435,170 | 339,203 | — | 32,662 | 1,849,002 | ||||||||||||||||||||||||||||
| 2017 | 435,000 | — | 567,270 | 423,951 | 395,850 | 161,304 | 38,577 | 2,021,952 | ||||||||||||||||||||||||||||
Gregory P. Merk Executive Vice President | 2019 | 435,000 | — | 401,654 | 292,594 | 230,724 | 1,134,926 | 27,522 | 2,522,420 | |||||||||||||||||||||||||||
| 2018 | 420,000 | — | 430,967 | 313,322 | 337,428 | — | 24,764 | 1,526,481 | ||||||||||||||||||||||||||||
| 2017 | 403,000 | — | 425,453 | 302,822 | 351,799 | 364,368 | 23,766 | 1,871,207 | ||||||||||||||||||||||||||||
Jeffrey A. Pembroke Executive Vice President | 2019 | 432,000 | — | 365,140 | 275,969 | 211,162 | 728,979 | 36,554 | 2,049,805 | |||||||||||||||||||||||||||
| 2018 | 415,000 | — | 380,743 | 292,434 | 389,789 | 37,374 | 38,794 | 1,554,134 | ||||||||||||||||||||||||||||
| 2017 | 403,000 | — | 264,726 | 196,834 | 301,444 | 181,553 | 31,918 | 1,379,475 | ||||||||||||||||||||||||||||
Michael F. Hilton Former President and Chief Executive Officer | 2019 | 945,000 | — | 2,324,884 | 1,709,014 | 675,675 | 1,276,703 | 111,133 | 7,042,409 | |||||||||||||||||||||||||||
| 2018 | 925,000 | — | 2,509,619 | 1,942,599 | 1,082,250 | 454,746 | 82,876 | 6,997,090 | ||||||||||||||||||||||||||||
| 2017 | 875,000 | — | 2,347,868 | 1,829,045 | 1,103,375 | 505,485 | 87,542 | 6,748,315 | ||||||||||||||||||||||||||||
| (1) | This column includes amounts of base salary deferred into the 2005 Deferred Compensation Plan. These deferrals are noted in footnote 1 to the“Non-Qualified Deferred Compensation” table. |
| (2) | This column represents the grant date fair value of restricted shares and performance share units as calculated under FASB ASC Topic 718. The grant date fair value disclosed for performance share awards is based on target performance. The maximum performance share award amount with respect to each of the named executive officers is shown in the table below. The assumptions made in valuing share awards reported in this column for |
Named Executive Officer
| Fiscal
| Maximum
| Maximum Grant Date Fair Value Payout
| Fiscal Year | Maximum Payout (# Units) | Maximum Grant Date Fair Value Payout ($) | ||||||||||||
Michael F. Hilton | 2018 | 26,800 | $3,308,460 | |||||||||||||||
Sundaram Nagarajan | 2019 | 11,134 | $ | 1,577,242 | ||||||||||||||
| 2018 | — | $ | — | |||||||||||||||
| 2017 | 29,800 | $3,091,750 | 2017 | — | $ | — | ||||||||||||
| 2016
| 36,800
| $2,490,992
| ||||||||||||||||
Gregory A. Thaxton | 2018 | 6,200 | $ 765,390 | 2019 | 6,000 | $ | 720,720 | |||||||||||
| 2017 | 7,200 | $ 747,000 | 2018 | 6,200 | $ | 765,390 | ||||||||||||
| 2016
| 9,600
| $ 649,824
| 2017 | 7,200 | $ | 747,000 | ||||||||||||
John J. Keane | 2018 | 6,200 | $ 765,390 | 2019 | 6,000 | $ | 720,720 | |||||||||||
| 2018 | 6,200 | $ | 765,390 | |||||||||||||||
| 2017 | 7,200 | $ 747,000 | 2017 | 7,200 | $ | 747,000 | ||||||||||||
| 2016
| 9,600
| $ 649,824
| ||||||||||||||||
Gregory P. Merk | 2018 | 4,500 | $ 555,525 | 2019 | 4,400 | $ | 528,528 | |||||||||||
| 2017 | 5,400 | $ 560,250 | 2018 | 4,500 | $ | 555,525 | ||||||||||||
| 2016
| 6,800
| $ 460,292
| 2017 | 5,400 | $ | 560,250 | ||||||||||||
Jeffrey A. Pembroke | 2018 | 4,100 | $ 506,145 | |||||||||||||||
Jeff Pembroke | 2019 | 4,000 | $ | 480,480 | ||||||||||||||
| 2018 | 4,100 | $ | 506,145 | |||||||||||||||
| 2017 | 3,360 | $ | 348,600 | |||||||||||||||
Michael F. Hilton | 2019 | 25,400 | $ | 3,051,048 | ||||||||||||||
| 2018 | 26,800 | $ | 3,308,460 | |||||||||||||||
| 2017 | 29,800 | $ | 3,091,750 | |||||||||||||||
| 64 | | Nordson Corporation – 2020 Proxy Statement |
| (3) | This column represents the grant date fair value of the stock option award as calculated under FASB ASC Topic 718 as of the respective grant date for each award. The grant date fair value was determined using the Black-Scholes valuation model. For additional information regarding such awards, see the “Grants of Plan-Based Awards” table below. The aggregate grant date fair value may not correspond to the actual value that may be recognized by the named executive officer. The actual amount, if any, realized upon the exercise of stock options will depend upon the market price of our common shares relative to the exercise price per share at the time of exercise. |
The table below lists the assumptions used to estimate the grant date fair value of stock options awarded to the named executive officers and included in this column as of October 31, 2019: |
Fiscal Year | Number of Shares Awarded | Exercise Price | Expected Life (in years) | Dividend Yield | Volatility | Risk-Free Rate | ||||||||||||||||||||||||
2017 | 104,900 | $ | 107.65 | 6.2 | 1.17 | % | 0.2918 | 2.01 | % | |||||||||||||||||||||
2018 | 98,200 | $ | 127.67 | 6.2 | 0.97 | % | 0.2670 | 2.20 | % | |||||||||||||||||||||
2019 | 92,000 | $ | 124.90 | 6.2 | 1.04 | % | 0.2414 | 2.95 | % | |||||||||||||||||||||
| The assumptions listed above differ slightly from those presented in Note 14 Stock-based Compensation in the “Notes to Consolidated Financial Statements” section of our Form10-K for 2019. The assumptions in Note 14 represent awards to all executive officers and key employees and grant dates during each year. |
The table below lists the assumptions used to estimate the grant date fair value of stock options awarded to the named executive officers and included in this column as of October 31, 2018:
| Fiscal Year | Number of Shares Awarded | Exercise Price | Expected Life (in years) | Dividend Yield | Volatility | Risk-Free Rate | ||||||
2014
| 76,000
| $ 71.75
| 6.1
| 1.03%
| 0.4419
| 1.78%
| ||||||
2015
| 85,900
| $ 79.66
| 6.1
| 1.10%
| 0.3919
| 1.84%
| ||||||
2016
| 127,800
| $ 70.91
| 6.2
| 1.54%
| 0.3037
| 1.90%
| ||||||
2017
| 104,900
| $107.65
| 6.2
| 1.17%
| 0.2918
| 2.01%
| ||||||
2018
| 98,200
| $127.67
| 6.2
| 0.97%
| 0.2670
| 2.20%
|
The assumptions listed above differ slightly from those presented in Note 14 Stock-based Compensation in the “Notes to Consolidated Financial Statements” section of our Form10-K for 2018. The assumptions in Note 14 represent awards to all executive officers and key employees and grant dates during each year.
See the “Grants of Plan-Based Awards” table for information with respect to the stock options awarded in 2018 and the “Outstanding Equity Awards” table for information with respect to the stock options awarded prior to 2018.
See the “Grants of Plan-Based Awards” table for information with respect to the stock options awarded in 2019 and the “Outstanding Equity Awards” table for information with respect to the stock options awarded prior to 2019. |
| (4) | The amounts in this column represent the totalnon-equity incentive plan compensation we recognized in the respective fiscal year under our Annual Cash Incentive Award and also include the portion of the Annual Cash Incentive Award payout that was deferred by our named executive officers. These deferrals are noted in footnote 1 to the“Non-Qualified Deferred Compensation” table. |
| (5) | The amounts entered in this column include the aggregate change in the actuarial present value of the named executive officer’s accumulated benefits under the Nordson Corporation Salaried Employees Defined Benefit Pension Plan and Excess Defined Benefit Pension Plan. There were no above-market or preferential earnings onnon-qualified deferred compensation. The present value amounts of the accumulated benefits were determined using assumptions discussed in Note 6 Retirement, Pension and other Post-retirement Plans in the “Notes to Consolidated Financial Statements” section of our Form10-K for |
The following table provides further details to the increases by plan for 2018:
The following table provides further details to the increases by plan for 2019: |
| Named Executive Officer | Change in Pension Plan Value ($) | Change in Excess Pension Plan Value ($) | Change in Pension Plan Value ($) | Change in Excess Pension Plan Value ($) | ||||||||||||||||
Sundaram Nagarajan | 2,862 | 66,274 | ||||||||||||||||||
Gregory A. Thaxton | 382,558 | 1,297,316 | ||||||||||||||||||
John J. Keane | 347,515 | 1,104,676 | ||||||||||||||||||
Gregory P. Merk | 106,622 | 1,028,304 | ||||||||||||||||||
Jeffrey A. Pembroke | 199,341 | 529,638 | ||||||||||||||||||
Michael F. Hilton
|
| 37,095
|
|
| 417,651
|
| 126,896 | 1,149,807 | ||||||||||||
Gregory A. Thaxton
|
| (45,626
| )
|
| 92,886
|
| ||||||||||||||
John J. Keane
|
| (35,831
| )
|
| 35,684
|
| ||||||||||||||
Gregory P. Merk
|
| (2,794
| )
|
| (129,449
| )
| ||||||||||||||
Jeffrey A. Pembroke
|
| (18,955
| )
|
| 56,329
|
| ||||||||||||||
| (6) | The following tables describe each component of the “All Other Compensation” column in the Summary Compensation Table: |
| Named Executive Officer | Total Perquisites ($) (a) | Company Tax-Qualified and | Dividends Related to Share- Based Plans ($) | Company Match of Charitable Contributions ($) | Total All ($) | Total Perquisites ($)(a) | Relocation Expenses ($) | Tax Gross-Up Related to Relocation Expenses ($) | Company Tax-Qualified and | Dividends Related to Share- Based Plans ($) | Company Match of Charitable Contributions ($) | Total All ($) | ||||||||||||||||||||||||||||||||||||||||||||||||
Sundaram Nagarajan | 5,000 | 166,989 | 69,077 | — | — | — | 241,066 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | 6,577 | — | — | 30,538 | 2,384 | 11,495 | 50,994 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
John J. Keane | 7,134 | — | — | 24,300 | 2,384 | 14,077 | 47,895 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory P. Merk | 900 | — | — | 24,834 | 1,788 | — | 27,522 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | 5,432 | — | — | 19,037 | 1,354 | 10,731 | 36,554 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael F. Hilton
|
| 9,800
|
|
| 49,927
|
|
| 18,419
|
|
| 4,730
|
|
| 82,876
|
| 13,094 | — | — | 68,210 | 7,689 | 22,140 | 111,133 | ||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton
|
| 6,637
|
|
| 21,628
|
|
| 4,500
|
|
| 5,089
|
|
| 37,854
|
| |||||||||||||||||||||||||||||||||||||||||||||
John J. Keane
|
| 6,681
|
|
| 21,481
|
|
| 4,500
|
|
| —
|
|
| 32,662
|
| |||||||||||||||||||||||||||||||||||||||||||||
Gregory P. Merk
|
| 875
|
|
| 20,554
|
|
| 3,335
|
|
| —
|
|
| 24,764
|
| |||||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke
|
| 4,518
|
|
| 16,951
|
|
| 2,325
|
|
| 15,000
|
|
| 38,794
|
| |||||||||||||||||||||||||||||||||||||||||||||
Nordson Corporation – 2020 Proxy Statement | | 65 |
| (a) | Total perquisites for |
| Named Executive Officer | Financial Planning ($) | Business and Airline Club Dues ($) | Executive Physicals ($) | Total ($) | Financial Planning ($) | Business and Airline Club Dues ($) | Executive Physicals ($) | Total ($) | ||||||||||||||||||||||||||||||||
Sundaram Nagarajan | 5,000 | — | — | 5,000 | ||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | 3,600 | 1,345 | 1,632 | 6,577 | ||||||||||||||||||||||||||||||||||||
John J. Keane | 5,000 | — | 2,134 | 7,134 | ||||||||||||||||||||||||||||||||||||
Gregory P. Merk | 900 | — | — | 900 | ||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | 2,500 | — | 2,932 | 5,432 | ||||||||||||||||||||||||||||||||||||
Michael F. Hilton
|
| 5,000
|
|
| 4,800
|
|
| —
|
|
| 9,800
|
| 5,000 | 3,989 | 4,105 | 13,094 | ||||||||||||||||||||||||
Gregory A. Thaxton
|
| 4,000
|
|
| 1,250
|
|
| 1,387
|
|
| 6,637
|
| ||||||||||||||||||||||||||||
John J. Keane
|
| 4,300
|
|
| —
|
|
| 2,381
|
|
| 6,681
|
| ||||||||||||||||||||||||||||
Gregory P. Merk
|
| 875
|
|
| —
|
|
| —
|
|
| 875
|
| ||||||||||||||||||||||||||||
Jeffrey A. Pembroke
|
| 2,400
|
|
| —
|
|
| 2,118
|
|
| 4,518
|
| ||||||||||||||||||||||||||||
| Nordson Corporation – |
We granted the following awards to our executive officers in 2018:2019:
Annual Cash Incentive Awards — The Compensation Committee establishes quantitative corporate financial and operating unit measures and performance goals at the beginning of a fiscal year. Any payouts are determined by actual fiscal year performance against thepre-established corporate financial and business operating performance measures for our named executive officers that lead our businesses. These awards are referred to in the following table as “ACIA.”
| • | Annual Cash Incentive Awards — The Compensation Committee establishes quantitative corporate financial and operating unit measures and performance goals at the beginning of a fiscal year. Any payouts are determined by actual fiscal year performance against thepre-established corporate financial and business operating performance measures for our named executive officers that lead our businesses. These awards are referred to in the following table as “ACIA.” |
Performance Share Incentive Awards — The Compensation Committee establishes performance share incentive awards for executive officers based on three-year cumulative performance measures. The award is in the form of performance share units which are settled in unrestricted Nordson common shares on aone-for-one basis or share equivalent units on aone-for-one basis for payouts that are deferred. The payout will vary based upon the actual level of performance over a three-year period. However, the threshold performance level must be achieved before any payout is made. These awards are referred to in the following table as “PSIA.”
| • | Performance Share Incentive Awards — The Compensation Committee establishes performance share incentive awards for executive officers based on three-year cumulative performance measures. The award is in the form of performance share units which are settled in unrestricted Nordson common shares on aone-for-one basis or share equivalent units on aone-for-one basis for payouts that are deferred. The payout will vary based upon the actual level of performance over a three-year period. However, the threshold performance level must be achieved before any payout is made. These awards are referred to in the following table as “PSIA.” |
Restricted Share Awards — Restricted shares are awarded subject to restrictions on transferability. The shares may be voted but not sold or transferred during the restriction period. Cash dividends are paid on the restricted shares during the restriction period. Restricted shares vest on apro-rata basis annually each year for three years following the date of award. These awards are referred to in the following table as “RS.”
| • | Restricted Share Awards — Restricted shares are awarded subject to restrictions on transferability. The shares may be voted but not sold or transferred during the restriction period. Cash dividends are paid on the restricted shares during the restriction period. Restricted shares vest generally on apro-rata basis annually each year for three years following the date of award. These awards are referred to in the following table as “RS.” |
Stock Option Awards — Stock options have a term of ten years, become exercisable over a four-year period at the rate of 25% per year beginning one year from the grant date, and have an exercise price equal to the closing price of our common shares on the grant date. Under the terms of award, the exercise price andtax-withholding obligations may be paid with previously owned common shares or with shares acquired upon exercise. Information with respect to each of these awards on anaward-by-award basis is set forth in the table below. These awards are referred to in the following table as “Options.”
| • | Stock Option Awards— Stock options have a term of ten years, become exercisable over a four-year period at the rate of 25% per year beginning one year from the grant date, and have an exercise price equal to the closing price of our common shares on the grant date. Under the terms of award, the exercise price andtax-withholding obligations may be paid with previously owned common shares or with shares acquired upon exercise. Information with respect to each of these awards on anaward-by-award basis is set forth in the table below. These awards are referred to in the following table as “Options.” |
Nordson Corporation – | | |
Grants of Plan-Based Awards
The following table and footnotes present the components of the plan-based awards made to our named executive officers during 2018.2019.
Grants of Plan-Based Awards Table
Estimated Future Payouts Under |
Estimated Future Payouts | All Other (#) | All Other (#) | Exercise ($/sh) | Grant Fair Value ($) | Estimated Future Payouts | Estimated Future Payouts | All Other (#) | All Other (#) | Exercise ($/sh) | Grant Fair Value ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Plan
| Grant Date
| Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| Plan | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hilton | ACIA | 11/20/2017 | 462,500 | 925,000 | 1,850,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nagarajan | ACIA | 8/1/2019 | — | 212,500 | 425,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSIA | 8/1/2019 | — | — | — | 2,784 | 5,567 | 11,134 | — | — | — | 788,621 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSIA | 11/20/2017 | — | — | — | 6,700 | 13,400 | 26,800 | — | — | — | 1,654,230 | RS | 8/1/2019 | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RS | 11/20/2017 | — | — | — | — | — | — | 6,700 | — | — | 855,389 | Options | 8/1/2019 | — | — | — | — | — | — | — | — | $ | 138.53 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 11/20/2017 | — | — | — | — | — | — | — | 55,800 | $ | 127.67 | 1,942,599 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thaxton | ACIA | 11/20/2017 | 164,500 | 329,000 | 658,000 | — | — | — | — | — | — | — | ACIA | 11/26/2018 | 181,875 | 363,750 | 727,500 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSIA | 11/20/2017 | — | — | — | 1,550 | 3,100 | 6,200 | — | — | — | 382,695 | PSIA | 11/26/2018 | — | — | — | 1,500 | 3,000 | 6,000 | — | — | — | 360,360 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RS | 11/20/2017 | — | — | — | — | — | — | 1,600 | — | — | 204,272 | RS | 11/26/2018 | — | — | — | — | — | — | 1,500 | — | — | 187,350 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 11/20/2017 | — | — | — | — | — | — | — | 12,500 | $ | 127.67 | 435,170 | Options | 11/26/2018 | — | — | — | — | — | — | — | 11,800 | $ | 124.90 | 392,342 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Keane | ACIA | 11/20/2017 | 159,250 | 318,500 | 637,000 | — | — | — | — | — | — | — | ACIA | 11/26/2018 | 164,500 | 329,000 | 658,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSIA | 11/26/2018 | — | — | — | 1,500 | 3,000 | 6,000 | — | — | — | 360,360 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSIA | 11/20/2017 | — | — | — | 1,550 | 3,100 | 6,200 | — | — | — | 382,695 | RS | 11/26/2018 | — | — | — | — | — | — | 1,500 | — | — | 187,350 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RS | 11/20/2017 | — | — | — | — | — | — | 1,600 | — | — | 204,272 | Options | 11/26/2018 | — | — | — | — | — | — | — | 11,700 | $ | 124.90 | 389,017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 11/20/2017 | — | — | — | — | — | — | — | 12,500 | $ | 127.67 | 435,170 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Merk | ACIA | 11/20/2017 | 136,500 | 273,000 | 546,000 | — | — | — | — | — | — | — | ACIA | 11/26/2018 | 141,375 | 282,750 | 565,500 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSIA | 11/20/2017 | — | — | — | 1,125 | 2,250 | 4,500 | — | — | — | 277,763 | PSIA | 11/26/2018 | — | — | — | 1,100 | 2,200 | 4,400 | — | — | — | 264,264 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RS | 11/20/2017 | — | — | — | — | — | — | 1,200 | — | — | 153,204 | RS | 11/26/2018 | — | — | — | — | — | — | 1,100 | — | — | 137,390 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 11/20/2017 | — | — | — | — | — | — | — | 9,000 | $ | 127.67 | 313,322 | Options | 11/26/2018 | — | — | — | — | — | — | — | 8,800 | $ | 124.90 | 292,594 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pembroke | ACIA | 11/20/2017 | 134,875 | 269,750 | 539,500 | — | — | — | — | — | — | — | ACIA | 11/26/2018 | 140,400 | 280,800 | 561,600 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSIA | 11/20/2017 | — | — | — | 1,025 | 2,050 | 4,100 | — | — | — | 253,073 | PSIA | 11/26/2018 | — | — | — | 1,000 | 2,000 | 4,000 | — | — | — | 240,240 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RS | 11/20/2017 | — | — | — | — | — | — | 1,000 | — | — | 127,670 | RS | 11/26/2018 | — | — | — | — | — | — | 1,000 | — | — | 124,900 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Options
|
| 11/20/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 8,400
|
| $
| 127.67
|
|
| 292,434
|
| Options | 11/26/2018 | — | — | — | — | — | — | — | 8,300 | $ | 124.90 | 275,969 | |||||||||||||||||||||||||||||||||||||||||||||
Hilton | ACIA | 11/26/2018 | 472,500 | 945,000 | 1,890,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSIA | 11/26/2018 | — | — | — | 6,350 | 12,700 | 25,400 | — | — | — | 1,525,524 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RS | 11/26/2018 | — | — | — | — | — | — | 6,400 | — | — | 799,360 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 11/26/2018 | — | — | — | — | — | — | — | 51,400 | $ | 124.90 | 1,709,014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | These columns show the estimated dollar value of the potential payout under the ACIA at threshold, target, or maximum payout levels. The Compensation Committee’s process to determine payouts under the ACIA is described in |
| (2) | These columns show the potential number of shares to be paid out for our named executive officers under the PSIA at threshold, target, or maximum performance. The measures and potential payouts are described in more detail in |
| (3) | Values in this column reflect the grant date fair value for stock option awards, restricted shares, and PSIAs determined in accordance with FASB ASC Topic 718. The grant date fair value of the PSIAs are at target. The actual amounts that will be received by the named executive officer will be determined at the end of the performance period based upon our actual performance, which may differ from the performance that was probable on the grant date. |
| 68 | | Nordson Corporation – 2020 Proxy Statement |
For establishing grant date fair value of stock options, we use the Black-Scholes option pricing model to calculate the fair value of stock options. The key assumptions for the Black-Scholes valuation method include the expected life of the option, stock price volatility, the risk-free interest rate, dividend yield and exercise price. The exercise price of stock options is the fair market value of our common shares on the grant date. The following sets forth the assumptions used in the calculation of the amounts for stock option awards presented in the table: |
| a. | Expected Volatility: |
| b. | Risk-Free Interest Rate: The rate available at the time the award was made onzero-coupon U.S. Government issues with a remaining term equal to the expected life: |
| c. | Dividend Yield: |
| d. | Expected Life: 6.2 years. |
The calculations for the fair value of restricted shares are based upon the grant date fair value of restricted share awards determined using the market price of our common stock at the award date. |
Nordson Corporation – | | 69 |
OUTSTANDING EQUITY AWARDS AT OCTOBER 31, 20182019
The following narrative, table, and footnotes describe equity awards to our named executive officers under our Amended and Restated 2012 Nordson Corporation Stock Incentive and Award Plan that were outstanding as of the end of 2018:2019:
2017-2019 Performance Share Incentive Awards (disclosed as “2017 PSIA” awards in the “Stock Awards” columns).The 2017-2019 performance period began November 1, 2016 and concludes October 31, 2019. Settlement of these awards will be in the form of unrestricted Nordson common shares on aone-for-one basis. The ultimate value of the awards will depend on the number of share units earned and the price of our common shares at the time of settlement.
| • | 2018-2020 Performance Share Incentive Awards (disclosed as “2018 PSIA” awards in the “Stock Awards” columns).The 2018-2020 performance period began November 1, 2017 and concludes October 31, 2020. Settlement of these awards will be in the form of unrestricted Nordson common shares on aone-for-one basis. The ultimate value of the awards will depend on the number of share units earned and the price of our common shares at the time of settlement. |
2018-2020 Performance Share Incentive Awards (disclosed as “2018 PSIA” awards in the “Stock Awards” columns).The 2018-2020 performance period began November 1, 2017 and concludes October 31, 2020. Settlement of these awards will be in the form of unrestricted Nordson common shares on aone-for-one basis. The ultimate value of the awards will depend on the number of share units earned and the price of our common shares at the time of settlement.
| • | 2019-2021 Performance Share Incentive Awards (disclosed as “2019 PSIA” awards in the “Stock Awards” columns).The 2019-2021 performance period began November 1, 2018 and concludes October 31, 2021. Settlement of these awards will be in the form of unrestricted Nordson common shares on aone-for-one basis. The ultimate value of the awards will depend on the number of share units earned and the price of our common shares at the time of settlement. |
Restricted Share Awards (disclosed in the “Stock Awards” columns). Consist of the unvested restricted shares as of October 31, 2018.
| • | Restricted Share Awards (disclosed in the “Stock Awards” columns). Consist of the unvested restricted shares as of October 31, 2019. |
Stock Option Awards (disclosed in the “Option Awards” columns).Consist of outstanding stock options awarded to our named executive officers.
| • | Stock Option Awards (disclosed in the “Option Awards” columns).Consist of outstanding stock options awarded to our named executive officers. |
70 | | Nordson Corporation – |
Outstanding Equity Awards
The following table sets forth information with respect to performance share awards, restricted share awards and stock options held by our named executive officers as of October 31, 2018.2019. Dates noted below the names of the named executive officers represent award dates for stock options and restricted shares.
| Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Number of
| Number of
| Option
| Option Date
| Number of That Not
| Market Not
| Equity Awards: Units
| Equity Incentive Awards:
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael F. Hilton | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 PSIA | — | — | — | — | — | — | 29,800 | 3,655,566 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Named Executive Officer | Number of Securities Underlying Unexercised Options- Exercisable(1) (#) | Number of Securities Underlying Unexercised Options- Unexercisable(1) (#) | Option Exercise Price $/sh | Option Date | Number of That Not | Market Not | Equity Awards: Units | Equity Incentive Awards: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sundaram Nagarajan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 PSIA | — | — | — | — | — | — | 26,800 | 3,287,556 | — | — | — | — | — | — | 7,912 | 1,240,681 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 PSIA | — | — | — | — | — | — | 11,134 | 1,745,923 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares: | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | — | — | — | — | 3,068 | 376,352 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options: | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 PSIA | — | — | — | — | — | — | 6,200 | 972,222 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 PSIA | — | — | — | — | — | — | 6,000 | 940,860 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | — | — | — | — | 4,967 | 609,302 | — | — | — | — | — | — | 600 | 94,086 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | — | — | — | 6,700 | 821,889 | — | — | — | — | — | — | 1,067 | 167,316 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | — | — | — | 1,500 | 235,215 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Nov-2012 | 43,000 | — | 61.59 | 28-Nov-2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
25-Nov-2013 | 42,700 | — | 71.75 | 25-Nov-2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24-Nov-2014 | 36,825 | 12,275 | 79.66 | 24-Nov-2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | 36,400 | 36,400 | 70.91 | 23-Nov-2025 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | 15,100 | 45,300 | 107.65 | 21-Nov-2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | 55,800 | 127.67 | 20-Nov-2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 PSIA | — | — | — | — | — | — | 7,200 | 883,224 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 PSIA | — | — | — | — | — | — | 6,200 | 760,554 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | — | — | — | — | 800 | 98,136 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | — | — | — | — | 1,200 | 147,204 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | — | — | — | 1,600 | 196,272 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3-Dec-2009 | 11,250 | — | 27.26 | 3-Dec-2019 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7-Dec-2010 | 11,400 | — | 43.32 | 7-Dec-2020 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Nov-2011 | 13,000 | — | 43.73 | 28-Nov-2021 | — | — | — | — | 13,000 | — | 43.73 | 28-Nov-2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Nov-2012 | 11,000 | — | 61.59 | 28-Nov-2022 | — | — | — | — | 11,000 | — | 61.59 | 28-Nov-2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
25-Nov-2013 | 11,000 | — | 71.75 | 25-Nov-2023 | — | — | — | — | 11,000 | — | 71.75 | 25-Nov-2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24-Nov-2014 | 9,150 | 3,050 | 79.66 | 24-Nov-2024 | — | — | — | — | 12,200 | — | 79.66 | 24-Nov-2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | 8,600 | 8,600 | 70.91 | 23-Nov-2025 | — | — | — | — | 12,900 | 4,300 | 70.91 | 23-Nov-2025 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | 3,500 | 10,500 | 107.65 | 21-Nov-2026 | — | — | — | — | 7,000 | 7,000 | 107.65 | 21-Nov-2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | 12,500 | 127.67 | 20-Nov-2027 | — | — | — | — | 3,125 | 9,375 | 127.67 | 20-Nov-2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | 11,800 | 124.90 | 26-Nov-2028 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John J. Keane | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 PSIA | — | — | — | — | — | — | 7,200 | 883,224 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 PSIA | — | — | — | — | — | — | 6,200 | 760,554 | — | — | — | — | — | — | 6,200 | 972,222 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 PSIA | — | — | — | — | — | — | 6,000 | 940,860 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | — | — | — | — | 800 | 98,136 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | — | — | — | — | 1,200 | 147,204 | — | — | — | — | — | — | 600 | 94,086 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | — | — | — | 1,600 | 196,272 | — | — | — | — | — | — | 1,067 | 167,316 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | — | — | — | 1,500 | 235,215 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7-Dec-2010 | 16,000 | — | 43.32 | 7-Dec-2020 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Nov-2011 | 16,000 | — | 43.73 | 28-Nov-2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Nov-2012 | 11,900 | — | 61.59 | 28-Nov-2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
25-Nov-2013 | 11,500 | — | 71.75 | 25-Nov-2023 | — | — | — | — | 11,500 | — | 71.75 | 25-Nov-2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24-Nov-2014 | 9,375 | 3,125 | 79.66 | 24-Nov-2024 | — | — | — | — | 12,500 | — | 79.66 | 24-Nov-2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | 8,600 | 8,600 | 70.91 | 23-Nov-2025 | — | — | — | — | 12,900 | 4,300 | 70.91 | 23-Nov-2025 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | 3,500 | 10,500 | 107.65 | 21-Nov-2026 | — | — | — | — | 7,000 | 7,000 | 107.65 | 21-Nov-2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | 12,500 | 127.67 | 20-Nov-2027 | — | — | — | — | 3,125 | 9,375 | 127.67 | 20-Nov-2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | 11,700 | 124.90 | 26-Nov-2028 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nordson Corporation – | | 71 |
| Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Number of
| Number of
| Option
| Option Date
| Number of That Not
| Market Not
| Equity Awards: Units
| Equity Incentive Awards:
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Named Executive Officer | Number of Securities Underlying Unexercised Options- Exercisable(1) (#) | Number of Securities Underlying Unexercised Options- Unexercisable(1) (#) | Option Exercise Price $/sh | Option Date | Number of That Not | Market Not | Equity Awards: Units | Equity Incentive Awards: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory P. Merk | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 PSIA | — | — | — | — | — | — | 5,400 | 662,418 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 PSIA | — | — | — | — | — | — | 4,500 | 552,015 | — | — | — | — | — | — | 4,500 | 705,645 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 PSIA | — | — | — | — | — | — | 4,400 | 689,964 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | — | — | — | — | 568 | 69,677 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | — | — | — | — | 900 | 110,403 | — | — | — | — | — | — | 450 | 70,565 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | — | — | — | 1,200 | 147,204 | — | — | — | — | — | — | 800 | 125,448 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | — | — | — | 1,100 | 172,491 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Feb-2019 | — | — | — | — | 6,408 | 1,004,838 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7-Dec-2010 | 9,000 | — | 43.32 | 7-Dec-2020 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Nov-2011 | 10,000 | — | 43.73 | 28-Nov-2021 | — | — | — | — | 5,000 | — | 43.73 | 28-Nov-2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Nov-2012 | 7,600 | — | 61.59 | 28-Nov-2022 | — | — | — | — | 7,600 | — | 61.59 | 28-Nov-2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
25-Nov-2013 | 7,600 | — | 71.75 | 25-Nov-2023 | — | — | — | — | 7,600 | — | 71.75 | 25-Nov-2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24-Nov-2014 | 6,225 | 2,075 | 79.66 | 24-Nov-2024 | — | — | — | — | 8,300 | — | 79.66 | 24-Nov-2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | 6,700 | 6,700 | 70.91 | 23-Nov-2025 | — | — | — | — | 10,050 | 3,350 | 70.91 | 23-Nov-2025 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | 2,500 | 7,500 | 107.65 | 21-Nov-2026 | — | — | — | — | 5,000 | 5,000 | 107.65 | 21-Nov-2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | 9,000 | 127.67 | 20-Nov-2027 | — | — | — | — | 2,250 | 6,750 | 127.67 | 20-Nov-2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | 8,800 | 124.90 | 26-Nov-2028 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 PSIA | — | — | — | — | — | — | 3,360 | 412,171 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 PSIA | — | — | — | — | — | — | 4,100 | 502,947 | — | — | — | — | — | — | 4,100 | 642,921 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 PSIA | — | — | — | — | — | — | 4,000 | 627,240 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | — | — | — | — | 280 | 43,907 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | — | — | — | 667 | 104,592 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | — | — | — | 1,000 | 156,810 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Feb-2019 | — | — | — | — | 6,408 | 1,004,838 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24-Nov-2014 | 3,800 | — | 79.66 | 24-Nov-2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | — | — | — | — | 300 | 36,801 | — | — | 5,400 | 1,800 | 70.91 | 23-Nov-2025 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | — | — | — | — | 560 | 68,695 | — | — | 3,250 | 3,250 | 107.65 | 21-Nov-2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | — | — | — | 1,000 | 122,670 | — | — | 2,100 | 6,300 | 127.67 | 20-Nov-2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | 8,300 | 124.90 | 26-Nov-2028 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael F. Hilton | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 PSIA | — | — | — | — | — | — | 26,800 | 4,202,508 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 PSIA | — | — | — | — | — | — | 25,400 | 3,982,974 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | — | — | — | — | 1,382 | 216,711 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | — | — | — | 2,485 | 389,673 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | — | — | — | 6,400 | 1,003,584 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28-Nov-2012 | 43,000 | — | 61.59 | 28-Nov-2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
25-Nov-2013 | 3,200 | — | 71.75 | 25-Nov-2023 | — | — | — | — | 42,700 | — | 71.75 | 25-Nov-2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24-Nov-2014 | 2,850 | 950 | 79.66 | 24-Nov-2024 | — | — | — | — | 49,000 | — | 79.66 | 24-Nov-2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23-Nov-2015 | 3,600 | 3,600 | 70.91 | 23-Nov-2025 | — | — | — | — | 54,600 | 18,200 | 70.91 | 23-Nov-2025 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21-Nov-2016 | 1,625 | 4,875 | 107.65 | 21-Nov-2026 | — | — | — | — | 30,200 | 30,200 | 107.65 | 21-Nov-2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20-Nov-2017 | — | 8,400 | 127.67 | 20-Nov-2027 | — | — | — | — | 13,950 | 41,850 | 127.67 | 20-Nov-2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26-Nov-2018 | — | 51,400 | 124.90 | 26-Nov-2028 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Amounts in these columns represent outstanding vested and unvested stock options awarded from |
| 72 | | Nordson Corporation – 2020 Proxy Statement |
| (2) | Amounts in these columns represent restricted share awards that have not vested as of October 31, |
| (3) | This column reflects performance share units awarded in |
| (4) | The |
Nordson Corporation – | | |
STOCK OPTION EXERCISES AND STOCK VESTED TABLES
The following tables set forth information with respect to the stock options exercised, restricted shares vested and the Performance Share Incentive Award earned, before payment of any applicable withholding tax and broker commissions.
| Stock Option | 2017-2019 PSIA Payout | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock Option | 2016-2018 PSIA Payout | ||||||||||||||||||||||||||||||||||||||||||||||
| Named Executive Officer | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Earned (#) | Value ($) (1) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Earned (#) | Value ($)(1) | |||||||||||||||||||||||||||||||||||||||
Sundaram Nagarajan | — | — | 2,664 | 437,056 | |||||||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | 22,650 | $ | 2,173,661 | 4,363 | 715,794 | ||||||||||||||||||||||||||||||||||||||||||
John J. Keane | 43,900 | $ | 3,701,918 | 4,363 | 715,794 | ||||||||||||||||||||||||||||||||||||||||||
Gregory P. Merk | 14,000 | $ | 1,409,850 | 3,272 | 536,804 | ||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | 3,200 | $ | 218,978 | 2,036 | 334,026 | ||||||||||||||||||||||||||||||||||||||||||
Michael F. Hilton | 105,000 | $ | 9,883,940 | 34,095 | 3,844,552 | — | — | 18,059 | 2,962,760 | ||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | 7,475 | $ | 1,002,472 | 8,894 | 1,002,887 | ||||||||||||||||||||||||||||||||||||||||||
John J. Keane | — | — | 8,894 | 1,002,887 | |||||||||||||||||||||||||||||||||||||||||||
Gregory P. Merk | 12,200 | $ | 1,497,794 | 6,300 | 710,388 | ||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | — | — | 3,335 | 376,055 | |||||||||||||||||||||||||||||||||||||||||||
| (1) | Settlement of performance share units occurred on January 3, |
Restricted Shares | Restricted Shares | Restricted Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted Shares (Vested 11/24/17) (1) | Restricted Shares (Vested 11/23/17) (2) | Restricted Shares (Vested 11/30/17) (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Named Executive Officer | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (4) (a) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (4) (b) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (5) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(4)(a) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(4)(b) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(4)(c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sundaram Nagarajan | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | 800 | $ | 87,888 | 600 | $ | 77,016 | 533 | $ | 64,179 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John J. Keane | 800 | $ | 87,888 | 600 | $ | 77,016 | 533 | $ | 64,179 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory P. Merk | 568 | $ | 62,400 | 450 | $ | 57,762 | 400 | $ | 48,164 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | 300 | $ | 32,958 | 280 | $ | 35,941 | 333 | $ | 40,097 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael F. Hilton | 2,500 | $ | 315,663 | 3,066 | $ | 393,352 | 2,483 | $ | 318,718 | 3,068 | $ | 337,050 | 3,585 | $ | 460,171 | 4,215 | $ | 507,528 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | 600 | $ | 75,759 | 800 | $ | 102,636 | 600 | $ | 77,016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John J. Keane | 600 | $ | 75,759 | 800 | $ | 102,636 | 600 | $ | 77,016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gregory P. Merk | 468 | $ | 59,092 | 566 | $ | 72,615 | 450 | $ | 57,762 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | — | — | 300 | $ | 38,489 | 280 | $ | 35,941 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) |
|
These restricted shares were awarded November 23, 2015. |
These restricted shares were awarded November 21, 2016. |
| (3) | These restricted shares were awarded November 20, 2017. |
| (4) | Value realized was calculated by multiplying |
| (a) | November |
| (b) | November |
| (c) |
|
| Nordson Corporation – |
The following narrative, table and footnotes set forth the actuarial present value of, and other information about, the pension benefits accumulated by each of our named executive officers for 2018.2019.
| Named Executive Officer | Plan Name | Number of Years | Present Value of Accumulated Benefit (1)(2) ($) | Payments During Last Fiscal Year ($) | Plan Name | Number of Years | Present Value of Accumulated Benefit(1)(2) ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||||||||||||
Michael F. Hilton | Salaried Employees Pension Plan | 8.75 | 418,465 | — | ||||||||||||||||||||||||||||||
Sundaram Nagarajan | Salaried Employees Pension Plan | 0.25 | 2,862 | — | ||||||||||||||||||||||||||||||
| Excess Defined Benefit Pension Plan | 0.25 | 66,274 | — | |||||||||||||||||||||||||||||||
| Excess Defined Benefit Pension Plan | 8.75 | 3,876,129 | — | |||||||||||||||||||||||||||||||
Gregory A. Thaxton | Salaried Employees Pension Plan | 29.00 | 1,057,152 | — | Salaried Employees Pension Plan | 30.00 | 1,439,710 | — | ||||||||||||||||||||||||||
| Excess Defined Benefit Pension Plan | 29.00 | 3,098,010 | — | Excess Defined Benefit Pension Plan | 30.00 | 4,395,326 | — | |||||||||||||||||||||||||||
John J. Keane | Salaried Employees Pension Plan | 26.00 | 954,562 | — | Salaried Employees Pension Plan | 27.00 | 1,302,076 | — | ||||||||||||||||||||||||||
| Excess Defined Benefit Pension Plan | 27.00 | 3,607,392 | — | |||||||||||||||||||||||||||||||
| Excess Defined Benefit Pension Plan | 26.00 | 2,502,717 | — | |||||||||||||||||||||||||||||||
Gregory P. Merk (3) | Salaried Employees Pension Plan | 5.75 | 136,045 | — | Salaried Employees Pension Plan | 25.33 | 242,667 | — | ||||||||||||||||||||||||||
| Excess Defined Benefit Pension Plan | 24.33 | 1,877,719 | — | Excess Defined Benefit Pension Plan | 25.33 | 2,906,023 | — | |||||||||||||||||||||||||||
Jeffrey A. Pembroke | Salaried Employees Pension Plan | 13.08 | 370,767 | — | Salaried Employees Pension Plan | 14.08 | 570,108 | — | ||||||||||||||||||||||||||
| Excess Defined Benefit Pension Plan | 13.08 | 671,756 | — | Excess Defined Benefit Pension Plan | 14.08 | 1,201,394 | — | |||||||||||||||||||||||||||
Michael F. Hilton | Salaried Employees Pension Plan | 9.75 | 545,361 | — | ||||||||||||||||||||||||||||||
| Excess Defined Benefit Pension Plan | 9.75 | 5,025,936 | — | |||||||||||||||||||||||||||||||
| (1) | For the Salaried Employees Pension Plan, the actuarial assumptions used to determine the present value of the accumulated benefit at October 31, |
measurement date of October 31;
each participant’s benefit commences at age 65, the age at which retirement may occur without anyage-based reduction in benefits, discounted to October 31, 20182019 using a discount rate of 3.57%2.97%;
the benefits are payable as a single life annuity; and
post-retirement mortality based on the RP2006 Fully Generational Mortality Table for Healthy Employees projected with mortality improvements by Scale MP2016.MP2019.
| (2) | For the Excess Defined Benefit Pension Plan, the calculation of the present value of the accumulated benefit for Messrs. |
| (3) | Mr. Merk became a participant in the Salaried Employees Pension Plan and the Excess Defined Benefit Pension Plan effective February 1, 2013. He receives benefit service credit for his service prior to February 1, 2013 with Nordson under the Excess Defined Benefit Pension Plan. |
Salaried Employees Pension Plan
We sponsor the Nordson Corporation Salaried Employees Pension Plan (the “Salaried Employees Pension Plan”), a defined benefit pension plan for our U.S.-based salaried employees, including our U.S.-based named executive officers. Benefits under the pension plan are based on a “final average pay,” which means the monthly average of the highest aggregate compensation (base salary and cash incentive payment) for 60 months of the 120 most recent consecutive months prior to retirement. Compensation used to determine benefits under the Salaried Employees Pension Plan may not exceed the limit under the Internal Revenue Code.
Normal retirement age under the Salaried Employees Pension Plan is age 65. Employees who retire on or after age 55 may begin receiving their benefit immediately but experience a reduction in the benefit for every month prior to age 65 that the benefit begins. Employees become 100% vested in their benefit at the earlier of age 65, or after five years of service. The benefits are further reduced by benefits received under the Social Security program.
Nordson Corporation – | | |
If the employee dies prior to receiving the vested benefit, the surviving spouse, if any, will receive a 50% survivor annuity for the rest of the surviving spouse’s life. Benefits under the Salaried Employees Pension Plan become payable on the first of the month following retirement, absent any election by a participant to commence the payment of benefits at a different time. Benefits are payable in one of the following ways:
Life Only Annuity. If a participant is not married or has been married less than 12 months when payments begin and does not elect an optional payment method, he or she will receive the full amount of his or her benefit in equal monthly installments for the rest of his or her life. Payments begin on the first of the month following the retirement date. After death, no additional payments are made.
| • | Life Only Annuity. If a participant is not married or has been married less than 12 months when payments begin and does not elect an optional payment method, he or she will receive the full amount of his or her benefit in equal monthly installments for the rest of his or her life. Payments begin on the first of the month following the retirement date. After death, no additional payments are made. |
50% Joint & Survivor Annuity.If a participant is married for at least 12 months when payments begin, he or she will receive his or her benefit as a 50% Joint & Survivor Annuity, absent election of (and spousal consent for) an optional payment form. Under this option, a participant will receive a reduced monthly benefit during his or her lifetime. After the participant’s death, his or her spouse receives a benefit equal to 50% of the monthly benefit the participant was receiving. If the spouse dies before the participant, but after the participant begins receiving payments, the participant will continue to receive the same benefit amount during his or her lifetime and no additional payments are made after death.
| • | 50% Joint & Survivor Annuity.If a participant is married for at least 12 months when payments begin, he or she will receive his or her benefit as a 50% Joint & Survivor Annuity, absent election of (and spousal consent for) an optional payment form. Under this option, a participant will receive a reduced monthly benefit during his or her lifetime. After the participant’s death, his or her spouse receives a benefit equal to 50% of the monthly benefit the participant was receiving. If the spouse dies before the participant, but after the participant begins receiving payments, the participant will continue to receive the same benefit amount during his or her lifetime and no additional payments are made after death. |
100% (or 75%) Joint & Survivor Annuity.A participant will receive a reduced lifetime benefit under this option. The participant names a beneficiary and chooses the percentage of his or her benefit to continue to that individual after the participant’s death. After death, the beneficiary receives the percentage of benefit elected (100% or 75%) for the remainder of his or her life. The participant’s age at the date the benefit commences, the beneficiary’s age, and the percentage elected to continue after death affect the amount of the benefit received during the participant’s lifetime.
| • | 100% (or 75%) Joint & Survivor Annuity.A participant will receive a reduced lifetime benefit under this option. The participant names a beneficiary and chooses the percentage of his or her benefit to continue to that individual after the participant’s death. After death, the beneficiary receives the percentage of benefit elected (100% or 75%) for the remainder of his or her life. The participant’s age at the date the benefit commences, the beneficiary’s age, and the percentage elected to continue after death affect the amount of the benefit received during the participant’s lifetime. |
10 Year Certain Annuity.
| • | 10 Year Certain Annuity. A participant will receive a reduced lifetime benefit in equal monthly installments with payments guaranteed for at least ten years under this option. Payments continue for the rest of the participant’s life even if he or she lives longer than the period of time elected. However, if the participant receives less than 120 payments before death, the same monthly benefit continues to the beneficiary until the combined total number of installment payments are made. |
| • | Level Income Option. This option allows a participant to receive an increased monthly payment from the pension plan initially if a participant retires early and begins receiving payments from the pension plan before he or she is eligible for Social Security benefits. After Social Security benefits begin, the monthly payment from the pension plan is reduced. This option does not provide any survivor benefit and, therefore, no benefit is payable after death. |
As described above in the Compensation Discussion and Analysis on page 35, if Mr. Nagarajan were to die, become disabled, be terminated without cause or terminate his employment for good reason (whether or not in connection with a change in control of Nordson), the Salaried Pension Plan Benefit amounts reported above would be payable, as if he or she lives longer than the period of time elected. However, if the participant receives less than 120 payments before death, the same monthly benefit continueswere 100% vested in those benefits, pursuant to the beneficiary until the combined total number of installment payments are made.his Supplemental Individual Pension Benefit.
Level Income Option. This option allows a participant to receive an increased monthly payment from the pension plan initially if a participant retires early and begins receiving payments from the pension plan before he or she is eligible for Social Security benefits. After Social Security benefits begin, the monthly payment from the pension plan is reduced. This option does not provide any survivor benefit and, therefore, no benefit is payable after death.
Excess Defined Benefit Pension Plan
We also sponsor an Excess Defined Benefit Pension Plan for our U.S.-based executive officers. This plan is anon-tax qualified supplemental defined benefit plan designed to work in conjunction with the Salaried Employees Pension Plan. The pension benefit outlined above for the Salaried Employees Pension Plan is calculated as if there were no compensation limits under the Internal Revenue Code. Then, the maximum benefit allowable is paid out under the Salaried Employees Pension Plan and the balance is paid out under the Excess Defined Benefit Pension Plan. In addition to the benefit payout alternatives under the Salaried Employees Pension Plan, our executive officers may under the Excess Defined Benefit Pension Plan elect a lump sum payout of the benefit following termination of employment.
Benefits under the Excess Defined Benefit Pension Plan are unsecured and are payable from our general assets. Payments will be delayed if and to the extent payment within six months of the
termination of employment will result in the imposition of additional taxes on the executive officer pursuant to Section 409A of the Internal Revenue Code. Payments delayed due to Section 409A rules will accrue interest during the deferral period at the10-year Treasury bill rate in effect on the first business day of the Excess Defined Benefit Pension Plan year in which the delayed payment period commences.
| 76 | | Nordson Corporation – 2020 Proxy Statement |
NON-QUALIFIED DEFERRED COMPENSATION
The following narrative, table and footnotes set forth the contributions, earnings, withdrawals or distributions, and aggregate balances for the named executive officers in 20182019 under the Amended and Restated 2005 Deferred Compensation Plan.
| Deferred Compensation Plan | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Compensation Plan | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Named Executive Officer | Executive Contributions in Last Fiscal Year (1) ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year (2) ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last Fiscal Year End (3) ($) | Executive Contributions in Last Fiscal Year(1) ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year(2) ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Last Fiscal | ||||||||||||||||||||||||||||||||||||||||||
Sundaram Nagarajan | 11,180 | — | 392 | — | 11,573 | |||||||||||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | 48,454 | 17,839 | 1,086,587 | — | 6,181,907 | |||||||||||||||||||||||||||||||||||||||||||||||
John J. Keane | 30,000 | 16,000 | 465,828 | — | 3,305,648 | |||||||||||||||||||||||||||||||||||||||||||||||
Gregory P. Merk | 209,286 | 14,977 | 280,137 | — | 1,606,900 | |||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | 37,359 | 11,045 | 16,527 | — | 149,357 | |||||||||||||||||||||||||||||||||||||||||||||||
Michael F. Hilton | 121,622 | 59,810 | (373,063 | ) | — | 19,084,883 | 121,598 | 52,698 | 5,205,849 | — | 24,465,028 | |||||||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | 245,554 | 20,334 | (6,429) | — | 5,029,027 | |||||||||||||||||||||||||||||||||||||||||||||||
John J. Keane | 30,000 | 15,900 | 3,052 | — | 2,793,820 | |||||||||||||||||||||||||||||||||||||||||||||||
Gregory P. Merk | 177,777 | 16,434 | 19,698 | — | 1,102,501 | |||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | 19,936 | 10,637 | 3,420 | — | 84,427 | |||||||||||||||||||||||||||||||||||||||||||||||
| (1) | This column includes: |
| (a) | Amounts of base salary each named executive officer deferred in |
| (b) | Amounts of Annual Cash Incentive Award payout deferred in |
| (c) | Of the |
| (2) | The increase in aggregate earnings is attributable primarily to appreciation in the share price of Nordson common stock in |
| (3) | The fiscalyear-end aggregate balances reported in this column include the amounts of |
| (a) | Base salary: Mr. |
| (b) | Annual Cash Incentive Award payout: Mr. |
| (c) | Settlement date dollar value of Performance Share Incentive Award payout: Mr. |
Deferred Compensation Plan
Under the Amended and Restated 2005 Deferred Compensation Plan, our executive officers may elect to defer up to 100% of their base pay and Annual Cash Incentive Award payout, and 90% of their Performance Share Incentive Award payout each year. An executive officer may elect to invest in a number of investment accounts designated by the Compensation Committee, including an account comprised of units of our common shares. The cash investment accounts mirror the investment funds and investment returns provided under our qualified defined contribution 401(k) Plan, although the plans are not linked. The number of units credited to the share unit account is based on the closing price of our common shares on the day the share units are credited to the account and includes additional share units credited for quarterly dividends paid on our common shares.
|
Distributions are made in either a lump sum or installments based upon the executive officer’s annual election. An executive officer may elect to receive payment in the form of a single lump sum or periodic payments over a period of 5, 10, or 15 years. No later than 12 months prior to a distribution, an executive officer may make an election to change the payment date or form of payment, provided that the distribution occurs at least 5 years after the original date of distribution previously elected by the executive officer.
The Internal Revenue Code places limits on amounts that “highly compensated employees,” such as our executive officers, may contribute to 401(k) plans. Correspondingly, because of these limits, matching contributions to the 401(k) Plan accounts of our executive officers in 20182019 were limited. In order to restore any matching contribution amount that may have been forgone by our executive officers because of this limitation, we
Nordson Corporation – 2020 Proxy Statement | | 77 |
provide executive officers the opportunity to capture this potentially lost match in the deferred compensation plan. This restoration match is made to the executive officers who defer at least a minimum portion of their base salary.
For all distributions, cash will be paid with respect to the cash accounts and our common shares will be issued equal to the number of share units in the executive officer’s share equivalent unit account. Upon an executive officer’s death, payment of any balance in a deferral account will be made to a designated beneficiary.
In order to permit deferrals and payouts that comply with Section 409A of the Internal Revenue Code, we adopted the 2005 Deferred Compensation Plan effective for deferrals by the executive officers after January 1, 2005. On December 10, 2008, the Compensation Committee adopted the Amended and Restated 2005 Deferred Compensation Plan to bring the plan into compliance with final rules issued under Section 409A.
The investment options and respective returns under the Amended and Restated 2005 Deferred Compensation Plan for 2016, 2017, 2018 and 20182019 were as follows:
Investment Funds
|
2018 Return
|
2017 Return
|
2016 Return
| ||||||||||||
Investment Contract
|
| 3.00
| %
|
| 3.00
| %
|
| 3.05
| %
| ||||||
Money Market Trust
|
| 0.80
| %
|
| 0.01
| %
|
| (0.24
| )%*
| ||||||
Large Cap Value (500 Index B)
|
| 6.41
| %
|
| 16.10
| %
|
| 3.58
| %
| ||||||
Large Cap Blend (Equity-Income)
|
| 0.78
| %
|
| 11.12
| %
|
| 6.90
| %
| ||||||
Large Cap Growth (Blue Chip Growth)
|
| 9.77
| %
|
| 32.71
| %
|
| (0.55
| )%
| ||||||
International Equity Index (B)
|
| (9.15
| )%
|
| 23.65
| %
|
| (0.05
| )%
| ||||||
Nordson Stock (includes dividends)
|
| 13.82
| %
|
| 13.82
| %
|
| 41.94
| %
| ||||||
|
Investment Funds | 2019 Return | 2018 Return | 2017 Return | |||||||||||||||||
Investment Contract | 3.00 | % | 3.00 | % | 3.00 | % | ||||||||||||||
Money Market Trust | 2.07 | % | 0.80 | % | 0.01 | % | ||||||||||||||
Large Cap Value (500 Index B) | 10.56 | % | 6.14 | % | 16.10 | % | ||||||||||||||
Large Cap Blend (Equity-Income) | 14.06 | % | 0.78 | % | 11.12 | % | ||||||||||||||
Large Cap Growth (Blue Chip Growth) | 14.33 | % | 9.77 | % | 32.71 | % | ||||||||||||||
International Equity Index (B) | 11.28 | % | (9.15 | )% | 23.65 | % | ||||||||||||||
Nordson Stock (includes dividends) | 29.00 | % | 13.82 | % | 13.82 | % | ||||||||||||||
| Nordson Corporation – |
POTENTIAL BENEFITS UPON TERMINATION OR CHANGE OF CONTROL
The following table and narrative address the impact a loss of employment in each of the following scenarios as of October 31, 20182019 would have on executive compensation and benefits: termination for cause or voluntary termination, death, long-term disability, retirement, involuntary termination and termination without cause or for good reason, and payments in connection with a termination following achange-in-control.
Payout of account balances of our executive officers’ deferred compensation plan accounts, qualified and excess defined benefit pension plans, and qualified defined contribution 401(k) plan would be made under the distribution provisions of those plans.
Benefit or Payment |
| Termination for Cause Voluntary | Termination Death, Disability(1) (age 65)(2) | Termination Retirement | Involuntary Termination(3) / Termination | Termination following a | ||||||
Severance (Cash) | None | None | None | Chief Executive
Described in the “Severance Agreements” section above under Part IV of Compensation Discussion and Analysis | Lump sum cash payment equal to two times the sum of the executive officer’s annual base salary and cash incentive award (at target payout) | |||||||
Stock Options | Forfeited | Death or Disability: full
Retirement at 65: vesting continues except for awards made less than 12 months prior to termination, which are forfeited(6) | Vesting Continues except for awards made less than 12 months prior to termination, which are forfeited(7) | Forfeited | Vest upon achange-in-control | |||||||
Service-Based Shares (Unvested) | Forfeited | Death or Disability: full
Retirement at 65: full vesting, except for awards made less than 12 months prior to termination, which are forfeited | Pro-rated vesting based on number of months of service since award date except for awards made less than 12 months prior to termination, which are forfeited | Chief Executive
Full vesting
All Others: Forfeited | Vest upon achange-in-control | |||||||
Performance Share Incentive Award | Forfeited | Pro-rated payout determined at the conclusion of the respective performance period | Pro-rated payout determined at the conclusion of the respective performance period | Forfeited | Vesting with payout based on performance at target as of the date ofchange-in-control | |||||||
Excess Defined |
| No enhancement | No
| No enhancement | No Enhancement, except Supplemental Individual Pension Benefit for Mr. Nagarajan upon termination prior to full vesting under Salaried Employees Pension Plan | Two (2) additional years of age and benefit service Supplemental Individual Pension Benefit for Mr. Nagarajan upon termination prior to full vesting under Salaried Employees Pension Plan | ||||||
Paid Health Care Benefits | None | None | None | Chief Executive For Others: None | Yes | |||||||
Nordson Corporation – | | |
Benefit or Payment | Termination for Cause Voluntary | Termination Death, Disability(1) (age 65)(2) | Termination Retirement | Involuntary Termination(3) / Termination | Termination following a | |||||
| ||||||||||
| None | None | None | None | Yes (up to $50,000) | ||||||
Excise and | None | None | None | None | Yes(8) | |||||
| (1) | A disability benefit is payable under the long-term disability plan under a group life insurance policy. Any amounts due to an executive officer above the maximum disability payment provided by the policy ($25,000 per month) would be paid from our general assets. In the event of the Chief Executive Officer’s death, the surviving spouse will be entitled to: (a) a life insurance benefit equal to two times the sum of her or his annual base salary and target Annual Cash Incentive Award for the fiscal year in which the death occurs; (b) continued health benefits for 2 years; and (c) apro-rated amount of the Chief Executive Officer’s Annual Cash Incentive Award for the fiscal year of death based upon actual performance in such fiscal year, as determined at the end of the applicable performance period. In the event of the Chief Executive Officer’s termination of employment due to disability when she or he is age 65 or older or a termination due to retirement, the Chief Executive Officer shall receive a $12,000 Company-paid retiree life insurance benefit. |
| (2) | Predicated upon retirement under the Company-sponsored pension plan. Stock option and restricted share awards made less than 12 months prior to date of termination of employment are forfeited. |
| (3) | Presumes involuntary termination was not due to a violation of the Company’s Code of Ethics and Business Conduct. |
| (4) | We have no contractual obligation to provide severance payments or benefits to an executive officer whose employment is terminated without cause, other than with respect to |
If any negotiated severance arrangement were entered into between us and an executive officer for severance payments, we would require the executive officer to sign a general release and waiver of claims against us and would typically require compliance with confidentiality andnon-compete restrictions. Any agreed-upon severance payment will be subject to delay in the commencement of payments required by Section 409A of the Internal Revenue Code. |
“Cause” and “Good Reason” are discussed in the “Severance Agreement” section of the Compensation Discussion and Analysis section of this Proxy Statement. |
| (5) | Achange-in-control occurs if and when: |
a report is filed with the SEC on Schedule 13D or Schedule14D-1 (or any successor schedule, form, or report), each as promulgated pursuant to the Exchange Act, disclosing that any “person” (as the term “person” is used in Section 13(d) or Section 14(d)(2) of the Exchange Act) is or becomes a beneficial owner, directly or indirectly, of securities representing 35% or more of the combined voting power of our then outstanding securities eligible to vote for the election of the Board of Directors;
during any period of 24 consecutive months, individuals who, at the beginning of such24-month period were our directors, which we refer to as the incumbent board, cease to constitute at least a majority of the Board of Directors, unless the election, or nomination for election, of any person becoming a director subsequent to the beginning of such24-month period was approved by a vote of at leasttwo-thirds of the incumbent board;
all or substantially all of our assets are sold in a single transaction or a series of related transactions to a single purchaser or a group of affiliated purchasers; or
we are merged or consolidated with another corporation and, as a result, securities representing less than 50% of the combined voting power of the surviving or resulting corporation’s securities (or of the securities of a parent corporation in case of a merger in which the surviving or resulting corporation becomes a wholly-owned subsidiary of the parent corporation) are owned in the aggregate by holders of our securities immediately prior to such merger or consolidation.
Upon achange-in-control, all outstanding equity compensation awards vest immediately. Unlike the “double trigger” discussed above, no termination of employment is required for the accelerated vesting of the awards. This “single-trigger” vesting provides our named executive officers with the same opportunity as our shareholders to realize the value created by the transaction.
Upon achange-in-control, all outstanding equity compensation awards vest immediately. Unlike the “double trigger” discussed above, no termination of employment is required for the accelerated vesting of the awards. This “single-trigger” vesting provides our named executive officers with the same opportunity as our shareholders to realize the value created by the transaction. |
| (6) | Vested options may be exercised for the life of the option. |
| (7) | Vested options may be exercised for the earlier of (a) five (5) years following retirement date or (b) the life of the option. |
| (8) | Effective November 1, 2015, we have eliminated gross up payments on any severance benefits for tax purposes. |
| 80 | | Nordson Corporation – 2020 Proxy Statement |
Enhanced Payments and Benefits Assuming Termination as of October 31, 20182019
The following table reflects the estimated value of enhanced payments and benefits that the named executive officers would receive under various termination scenarios assuming that all listed events occurred as of the last business day of fiscal year 2018 –2019 — October 31, 2018.2019.
In estimating the amounts reflected in the following table, we also applied the following general assumptions and principles:
No amounts for 20182019 base salary or payouts under the 20182019 Annual Cash Incentive Award and 2016-20182017-2019 Performance Share Incentive Award are included in the following tables because the amounts are already earned as of October 31, 20182019 and are not enhanced by any of the triggering events;
Amounts were calculated based on each named executive officer’s age, compensation, and years of service as of October 31, 2018;2019;
The value of our common shares on October 31, 20182019 was $122.67$156.81 per share;
Unvested stock options that vest were valued at an amount per share equal to the difference between $122.67$156.81 and the grant date share price for each of the stock options on the grant date;
No amounts were included for account balances in our qualified defined contribution 401(k) plan because this plan is available to all U.S.-based salaried employees who have worked the minimum amount of hours required to receive this benefit;
No amounts were included for balances in a named executive officers’ deferred compensation account. Fiscalyear-end deferred account balances are reported in theNon-Qualified Deferred Compensation table;
The value of benefits and payments that are generally available to all employees on anon-discriminatory basis are not included;
The value of performance share units for termination other than voluntary termination or termination due to cause was determined using payout at target performance;
The value of restricted shares subject to accelerated vesting is based on shares outstanding as of October 31, 20182019 as shown in the Outstanding Equity Awards table. Value is determined by multiplying the number of shares by the closing price of our common shares on October 31, 2018 – $122.672019 — $156.81 per share;
NoneOther than Mr. Hilton, who retired from the Company effective December 31, 2019, none of the named executive officers is qualified to receive an age 65 retirement pension benefit as of October 31, 2018.2019. The actuarial present value of the deferred vested benefit under our Salaried Employees Pension Plan for each named executive officer may be found in the Pension Benefits table;table. In the event of Mr. Nagarajan’s death, disability, termination without cause or termination for good reason (whether or not in connection with a change in control of Nordson) on October 31, 2019, that benefit would have been provided pursuant to his Supplemental Individual Pension Benefit; and
Calculation of post-termination payout of the Excess Defined Benefit Pension Plan assumes a lump sum payout. Other assumptions used in the calculation are noted in footnote 1 to the Pension Benefits table. The payout amount in the event of a qualifying termination following achange-in-control reflects an additional two years of age and two years of service, up to a maximum age 65 and 30 years of service.
Nordson Corporation – | | |
Although the calculations are intended to provide reasonable estimates of the potential benefits, they are based on numerous assumptions and may not represent the actual amount a named executive officer would have received if termination had occurred on October 31, 2018.2019.
| Death and Disability ($) | Early Retirement (Age 55) (1) ($) | Involuntary Termination/ Termination Without Cause or for Good Reason (2) ($) | Qualifying in-Control ($) | Death and Disability ($) | Early Retirement (Age 55)(1) ($) | Involuntary Termination/ Termination Without Cause or for Good Reason(2) ($) | Qualifying Change-in-Control ($) | |||||||||||||||||||||||||||||||||
Sundaram Nagarajan | 436,559 | 436,559 | 3,400,000 | 10,086,006 | ||||||||||||||||||||||||||||||||||||
Gregory A. Thaxton | 2,251,649 | 1,576,862 | — | 19,168,541 | ||||||||||||||||||||||||||||||||||||
John J. Keane | 2,395,023 | 1,723,428 | — | 15,181,189 | ||||||||||||||||||||||||||||||||||||
Gregory P. Merk | 2,784,275 | 1,278,877 | — | 14,025,269 | ||||||||||||||||||||||||||||||||||||
Jeffrey A. Pembroke | 2,355,753 | 890,263 | — | 9,697,067 | ||||||||||||||||||||||||||||||||||||
Michael F. Hilton
|
|
6,734,973
|
|
|
5,961,604
|
|
|
5,507,542
|
|
|
27,790,593
|
| 9,775,727 | 6,985,234 | 5,389,968 | 54,683,473 | ||||||||||||||||||||||||
Gregory A. Thaxton
|
|
1,652,887
|
|
|
1,463,232
|
|
|
—
|
|
|
12,010,172
|
| ||||||||||||||||||||||||||||
John J. Keane
|
|
1,656,112
|
|
|
1,466,457
|
|
|
—
|
|
|
9,521,271
|
| ||||||||||||||||||||||||||||
Gregory P. Merk
|
|
1,219,426
|
|
|
1,075,419
|
|
|
—
|
|
|
6,197,050
|
| ||||||||||||||||||||||||||||
Jeffrey A. Pembroke
|
|
702,483
|
|
|
552,096
|
|
|
—
|
|
|
3,879,931
|
| ||||||||||||||||||||||||||||
| (1) |
|
| (2) |
|
| Nordson Corporation – |
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Item 402(u) of RegulationS-K, we are providing the following information with respect to our last completed fiscal year. The pay ratio information provided below is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K.
In determining the pay ratio information provided above, we first identified our median employee for the 2018 fiscal year by using the following methodology, assumptions, adjustments,For purposes of this disclosure and estimates, as permitted by Item 402(u) of RegulationS-K. We selectedthe rules, we used the median employee identified in 2018 for our 2019 analysis. There was no significant change in the Company’s employee population from 2018 to 2019 or in our compensation arrangements. In 2018, we examined the target total cash compensation (base salary plus target bonus) as the consistently applied compensation measure for all individuals, excluding our CEO, who were employed by us on September 1, 2018 as the date upon which we would identify our median employee, and, from our tax and payroll records, we compiled a list of2018. We included all full-time and part-time employees excluding the CEO, who were employed on that date. Weand we did not exclude any employees located outside the United States. We used total target cash compensation (base salary and annual cash incentive) as the consistently applied compensation measure for all employees. Sorting the list based on this measure, we selected our median employee.
Once our median employee was identified in the manner described above, weWe calculated the annual total compensation of the median employee usingby totaling the same methodology that we used to determinemedian employee’s annual base salary, annual cash incentive and pension value, if any. Using this calculation method, the annual total compensation of the CEO, as reported in the Summary Compensation Table. The annual total compensation our median employee, excluding the CEO, was $61,750. The$57,335. For our CEO, we used the total compensation for Mr. Nagarajan, our CEO as reported in the 2019 Compensation Table; however, because Mr. Nagarajan was appointed CEO in August 2019, we annualized Mr. Nagarajan’s base salary, annual cash incentive (based on a guaranteed minimum bonus at target), and pension value. We included the value of the performance share grants made on his date of hire. Using this methodology, the annual total compensation of our CEO as reported in the Summary Compensation Table on page 61 of this Proxy Statement, was $6,997,090;$3,437,271; and the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was 113.360 to 1.
The pay ratio disclosure rules of Item 402(u) of RegulationS-K provide reporting companies with flexibility in determining the methodology used to identify the median employee, in calculating the median employee’s annual total compensation and in estimating the ratio of the annual total compensation of the CEO to the median of the annual total compensation of all other employees. As such, our methodology may differ materially from the methodology used by other companies to prepare their pay ratio disclosures, which, along with differences in employee populations, geographic locations, business strategies and compensation practices, may contribute to a lack of comparability between our pay ratio and the pay ratio reported by other companies, including those within our industry.
Nordson Corporation – | | |
January 18, 201917, 2020
To: The Board of Directors of Nordson Corporation
The Audit Committee consists solely of independent Directors within the meaning of the Nasdaq listing standards. The Audit Committee oversees Nordson’s financial reporting process on behalf of the Board. Nordson’s independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an integrated audit of Nordson’s annual consolidated financial statements and internal control over financial reporting as of the end of the year in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB). The Committee operates under a written charter that specifies the Committee’s responsibilities. The full text of the Committee’s Charter is available at:www.nordson.com/en/our-company/investors/annual-reports-and-presentations. The Audit Committee members are not auditors and their functions are not intended to duplicate or to certify the activities of management and the independent registered public accounting firm.
Management has the responsibility for the financial statements and the reporting process, including the systems of internal control over financial reporting. In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the audited financial statements in the Annual Report on Form10-K for the fiscal year ended October 31, 2018,2019, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Committee discussed with Ernst & Young LLP, which is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles, its judgment as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with the Committee underby applicable requirements of the PCAOB Auditing Standard 1301,and the Securities and Exchange CommissionCommunications with Audit Committees.. In addition, the Committee has received and discussed with Ernst & Young LLP written disclosures regarding Ernst & Young LLP’s independence as required by PCAOB Ethics and Independence Rule 3526,Communication with Audit Committees Concerning Independence.applicable requirements of the PCAOB.
The Committee discussed with our internal auditor and Ernst & Young LLP the overall scope and plan for their respective audits. The Committee met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended October 31, 20182019 filed with the Securities and Exchange Commission. The Committee also evaluated and reappointed Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2019.2020.
This Audit Committee report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 (the “Exchange Act”), except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under the Exchange Act.
This report has been furnished by the members of the Audit Committee:
Frank M. Jaehnert, Chair
Randolph W. Carson
Arthur L. George, Jr.
Joseph P. Keithley
| Nordson Corporation – |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THESE PROXY MATERIALS
Why am I receiving this Proxy Statement? You have been sent this Proxy Statement and proxy/voting instruction card(s) because you were a shareholder, or held Nordson common stock through a broker, trustee, or other third party, at the close of business on January 2, 2019,2020, the record date for shareholders entitled to vote at the Annual Meeting. As of January 2, 2019,2020, there were outstanding, excluding treasury shares which cannot be voted, 57,609,58857,740,521 common shares entitled to one vote per share upon all matters presented to the shareholders.
What is a proxy? A proxy is your legal appointment of another person to vote the shares that you own in accordance with your instructions. The person you appoint to vote your shares is also called a proxy.
On the proxy/voting instruction card, you will find the names of the persons designated by the Company to act as proxies to vote your shares at the Annual Meeting. The proxies are required to vote your shares in the manner you instruct.
Who can attend the Annual Meeting? All shareholders of record as of the close of business on January 2, 20192020 may attend the meeting.
Must I inform anyone of my intent to attend the Annual Meeting? Yes. To permit your name to be registered with the Key Tower security service to gain access to the BakerHostetler LLP offices, you must inform the Company’s Secretary, Gina A. Beredo, in writing (letter ore-mail) before the Annual Meeting of your intent to attend the Annual Meeting. Ms. Beredo’ s contact information is as follows:
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E-mail address: secretary@nordson.com
Mailing Address: 28601 Clemens Road, Westlake, Ohio 44145.
Must I present credentials to permit access to the BakerHostetler LLP offices? Yes. You must present a form of picture identification to the security officer at the desk located on the main floor of the Key Tower. You will be provided a pass to permit access to the Key Tower elevators. You will proceed to the 20th floor offices of BakerHostetler LLP.
What if I have a disability? If you are disabled and would like to participate in the Annual Meeting, we can provide reasonable assistance. Please send any request for assistance to c/o Secretary, Nordson Corporation, 28601 Clemens Road, Westlake, Ohio 44145.
What proposals may I vote on at the Annual Meeting and how does the Board recommend I vote? The following chart explains your voting options with regard to each proposal to be voted upon at the Annual Meeting, how the Board of Directors recommends that you vote, and the vote required for that proposal to be approved.
Nordson Corporation – 2020 Proxy Statement | | 85 |
VOTING MATTERS AND BOARD RECOMMENDATIONS | ||||||||||
| PROPOSAL | VOTING OPTIONS | REQUIRED VOTE | BROKER DISCRETIONARY VOTE PERMITTED |
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1. Election of directors | “FOR” all nominees or “WITHHOLD” your vote for one or more of the nominees. | Each nominee must receive a plurality of the votes cast.(1) | No | FOR the election of each of the director nominees | ||||||
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2. Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending October 31, | “FOR” or “AGAINST” or “ABSTAIN” from voting. | Thisnon-binding proposal will be considered approved if more votes are cast in favor than against. | Yes | FOR | ||||
3. Advisory vote to approve compensation of named executive officers | “FOR” or “AGAINST” or “ABSTAIN” from voting. | Thisnon-binding proposal will be considered approved if more votes are cast in favor than against. | No | FOR | ||||
| (1) | Our majority voting policy states that any Director who fails to receive a majority of the votes cast in his/her favor is required to submit his/her resignation to the Board. The Governance & Nominating Committee of the Board would then consider each resignation and determine whether to accept or reject it. Abstentions and brokernon-votes will have no effect on the election of a Director and are not counted under our majority voting policy. |
| (2) | This is considered to be a routine matter under applicable rules and, therefore, if you hold your shares in street name and do not provide voting instructions to the broker, trustee, or other nominee that holds your shares, the nominee has discretionary authority to vote on this Proposal but not any other Proposals since they are considered to be“non-routine” matters. |
Abstentions as to any matter are counted in determining the presence of a quorum at the Annual Meeting. They are not included in the vote count for election of directors. However, abstentions will affect the outcome of the votevotes on Proposals 2 and 3, being equivalent to a vote “against” the Proposals.
Will any other matters be voted on? We are not aware of any other matters on which you will be asked to vote at the Annual Meeting. If other matters are properly brought before the Annual Meeting, the proxy holders will use their discretion to vote on these matters as they may arise. Furthermore, if a nominee cannot or will not serve as director, then the proxy holders will vote for a replacement nominated by the Board. We do not expect any nominee to be unwilling to serve.
May I ask questions at the Annual Meeting? Yes. Our management will respond to shareholder questions at the end of the meeting. In order to give a greater number of shareholders the opportunity to ask questions, we may impose certain procedural requirements.
What is the difference between holding shares as a shareholder of record, a beneficial owner, or a Nordson-sponsored retirement plan participant?
| • | Shareholder of record. If Nordson shares are registered in your name with our transfer agent, Computershare, Inc., you are considered the shareholder of record and these proxy materials have been sent directly to you. You may vote in person at the Annual Meeting. You may also award us your proxy to vote your shares by telephone, via the Internet, or by mailing your signed proxy/voting instruction card in the postage-paid envelope provided. The card provides voting instructions. |
| • | Beneficial owner (“in street name”). If your shares are not held in your name but instead are held in a brokerage account, by a trustee, or by another nominee, then that other entity/holder is considered the shareholder of record and you are considered a beneficial owner of those shares. We sent these proxy materials to that other entity/holder, and they have been forwarded to you with a voting instruction card. As the beneficial owner, you have the right to direct your broker, trustee, or other nominee how to vote. Please refer to the information your broker, trustee, or other nominee provided to determine what voting options are available to you. |
| • | Shares held as a participant in the Nordson Corporation Employees’ Savings Trust (“401(k)”) Plan and/or Nordson Corporation Employee Stock Ownership Plan (collectively, the “Plans”). If you participate in one or |
| 86 | | Nordson Corporation – 2020 Proxy Statement |
both of these Plans you may have certain voting rights regarding shares of our common stock credited to your account in the Plans. You do not own these shares. They are owned by the Plan trustee, which is the same trustee for both Plans. |
The Plans provide you with voting rights based on the number of shares that were constructively invested in your Plan account as of the close of business on the record date. You may vote these shares in much the same way as shareholders of record vote their shares, but you have an earlier deadline to vote.
You may vote the amount of shares credited to your account as of the record date for the Annual Meeting by telephone, via the Internet, or by mailing your signed proxy/voting instruction card in the postage-paid envelope provided. Your vote must be received by11:59 p.m., Eastern Time, on February 21, 2019.2020. You may vote these shares by following the instructions provided on the proxy/voting instruction card included with these materials.
By submitting your voting instructions, you will direct the Plan trustee:
How to vote the shares allocated to your account in the Plan(s), and
How to vote a portion of the shares allocated to the accounts of other participants in the Plan(s) who have not submitted voting instructions by the deadline.
The trustee will submit one proxy to vote all shares in each of the Plans. The trustee will vote the shares of participants submitting voting instructions in accordance with their instructions and will vote the remaining shares in each of the Plans in the same proportion as the final votes of all participants who actually voted. Please note that, if you do not submit voting instructions for the shares in your account by the voting deadline, those shares will be included with the other undirected shares and voted by the trustee as described above. Because the trustee submits one proxy to vote all shares in each of the Plans, you may not vote Plan shares in person at the Annual Meeting.
Where is Nordson Corporation common stock traded? Our common stock is traded and quoted on the Nasdaq Global Select Stock Market LLC under the symbol “NDSN.”
How many votes do I have, and can I cumulate my votes? You have one vote for each share of our common stock that you own.own as of the record date of the Annual Meeting. Unless cumulative voting is invoked by a shareholder through proper notice to Nordson as described under “Proposal 1: Election of Directors Whose Terms Expire in2022-Cumulative 2023-Cumulative Voting,” cumulative voting is not allowed.
How do I vote and what are the voting deadlines?
Shareholders of record and Plan participants. If you are a shareholder of record or a Plan participant, you may vote by proxy in any of the following three ways:
1.By telephone. If you reside in the United States or Canada, you may call1-800-690-6903, 24 hours a day, 7 days a week. Have your proxy/voting instruction card in hand when you call and follow the voice prompts to cast your vote.
2.Via the Internet. You may access the website atwww.proxyvote.com to cast your vote 24 hours a day, 7 days a week. With your proxy/voting instruction card in hand, follow the instructions provided to cast your vote.
3.By mail. You may mark, sign and date your proxy/voting instruction card and return it in the enclosed prepaid and addressed envelope. You do not need to mail the proxy/voting instruction card if you have voted by telephone or over the Internet.
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| VIA THE INTERNET | BY TELEPHONE | BY MAIL | IN PERSON | |||
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| www.proxyvote.com | Call 1-800-690-6903 in the U.S. or Canada | Follow the instructions on the proxy card | Attend our Annual Meeting and vote by ballot | |||
The Internet and telephone voting procedures are designed to authenticate votes cast and allow shareholders to appoint a proxy and to confirm that their actions have been properly recorded. Specific voting instructions are set forth on the accompanying proxy/voting instruction card.
If you are a shareholder of record, your deadline to cast your vote by proxy is11:59 p.m., Eastern Time, on February 25, 2019.24, 2020. You may also vote in person at the Annual Meeting.
If you are a Plan participant, your deadline to cast your vote by proxy is11:59 p.m., Eastern Time, on February 21, 2019.2020.
Nordson Corporation – 2020 Proxy Statement | | 87 |
Beneficial owners. If you are a beneficial owner, you should receive voting instructions from the broker, trustee, or other nominee holding your shares. You should follow the instructions in the notice or voting instructions provided by your broker, trustee, or nominee in order to instruct your broker, trustee, or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker, trustee, or nominee. Shares held beneficially may be voted in person at the Annual Meeting only if you obtain a legal proxy from the broker, trustee or nominee giving you the right to vote the shares.
All owners. If you receive more than one proxy/voting instruction card, it is important that you vote all shares represented by the multiple cards. Each card represents different shares.
May I change my vote? Yes. You may change your vote or revoke your proxy any time before the voting deadline.
Shareholders of record. If you are a shareholder of record, you may revoke your vote at any time before the final vote at the Annual Meeting by:
submitting a later-dated proxy by telephone or via the Internet since only your latest Internet or telephone proxy received by11:59 p.m., Eastern Time, on February 25, 201924, 2020 will be counted;
returning a later-dated, duly executed proxy card;
delivering a written revocation to our Corporate Secretary at 28601 Clemens Road, Westlake, Ohio 44145 before the Annual Meeting; or
attending the Annual Meeting in person and voting again.
Plan participants. If you are a Plan participant, you may revoke previously given voting instructions on or before11:59 p.m., Eastern Time, on February 21, 20192020 by filing either a written notice of revocation or a properly completed and signed voting instruction card bearing a later date with John Hancock Trust Company, LLC, the trustee for each of the Plans.
Beneficial Owners.owners. If you are a beneficial owner of your shares, you must contact the broker, trustee, or other nominee holding your shares and follow their instructions for changing your vote.
All owners. You will not revoke a proxy merely by attending the Annual Meeting. To revoke a proxy, you must take one of the actions described above.
What will happen if I do not vote my shares?
Shareholders of record. If you are the shareholder of record and you do not vote by proxy card, by telephone, via the Internet, or in person at the Annual Meeting, your shares will not be voted at the Annual Meeting.
Beneficial owners. If you are the beneficial owner of your shares, your broker, trustee, or nominee may vote your shares only on those proposals on which it has discretion to vote. Under theapplicable rules of the Securities and Exchange Commission (the “SEC”), your broker, trustee, or nominee does not have discretion to vote your shares onnon-routine matters such as Proposals 1 and 3. Therefore, if you do not provide voting instructions to your broker, trustee, or other nominee, your broker, trustee, or other nominee may only vote your shares on Proposal 2 and any other routine matters properly presented for a vote at the Annual Meeting.
| Nordson Corporation – |
What if I do not specify how my shares are to be voted? If you are a shareholder of record and you submit a duly executed proxy, but you do not provide voting instructions, your shares will be voted as indicated in the following table:
PROPOSAL |
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Proposal 1 — Election of | FOR ALL NOMINEES | |
Proposal 2 — Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2020 | FOR | |
Proposal 3 — Advisory vote to approve the compensation of our named executive officers | FOR | |
What constitutes a quorum, and why is a quorum required? Our Regulations require a quorum of shareholders to hold our Annual Meeting. A quorum will be present when at least a majority of the outstanding shares entitled to vote are represented at the Annual Meeting either in person or by proxy. Your shares will be counted towards the quorum if you submit a proxy or vote at the Annual Meeting. Abstentions and brokernon-votes (described below) will also count towards the quorum requirement. If a quorum is not achieved, a majority of the shares present at the Annual Meeting may adjourn the meeting to a later date.
What are brokernon-votes? A brokernon-vote occurs when a broker, trustee, or other nominee holding your shares does not receive voting instructions from you as the beneficial owner of the shares by a specified date before the Annual Meeting and does not have discretionary authority to vote those undirected shares on specified matters under SECapplicable rules. The election of directors (Proposal 1) and the approval, on an advisory basis, of the compensation of our named executive officers (Proposal 3) are considerednon-routine matters and discretionary voting on these matters is prohibited.
As a result, if you are a beneficial owner and hold your shares in street name, and do not give your broker, trustee, or other nominee instructions on how to vote your shares with respect to the election of directors or the advisory vote on named executive compensation, no votes will be cast on your behalf with respect to those proposals. The ratification of auditors (Proposal 2) is a discretionary matter, so your broker, trustee, or other nominee will be permitted to exercise discretionary authority to vote your shares with respect to the ratification of our selection of Ernst & Young LLP as our independent registered public accounting firm even if you do not give your broker, trustee, or other nominee instructions on how to vote your shares with respect to that proposal.
Brokernon-votes will be counted for purposes of calculating whether a quorum is present at the Annual Meeting, but will not be counted for purposes of determining the number of votes with respect to a particular proposal. Thus, a brokernon-vote will not impact our ability to obtain a quorum and will not otherwise affect the outcome of the vote on a proposal that requires a plurality of votes cast (Proposal 1) or the approval of Proposal 2 since brokers have discretion to vote uninstructed shares on that proposal. Brokernon-votes will have no effect on the outcome of the vote on Proposals 2 orProposal 3. It is important that you provide voting instructions for all shares you own beneficially.
Who will tabulate the votes? Broadridge Financial Solutions, Inc. (“Broadridge”) has been engaged as our independent agent to receive and tabulate shareholder votes. Broadridge will separately tabulate FOR, AGAINST and WITHHOLD votes, abstentions, and brokernon-votes. The Inspector of Election will certify the election results and perform any other acts required by Ohio Corporation Law.
What happens if the Annual Meeting is adjourned or postponed? Your proxy will still be effective and will be voted at the rescheduled Annual Meeting. You will still be able to change or revoke your proxy until it is voted.
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Who is paying for the costs of this proxy solicitation? We will bear the expense of soliciting proxies. Proxies may also be solicited by Nordson personnel who will not receivein person or by mail, telephone, facsimile or electronic communications, but no additional compensation for such solicitation. Copieswill be paid to them . We will also supply, at our expense, copies of proxy materials and the Annual Report to Shareholders will be supplied to brokers, trustees, and other nominees for the purpose of soliciting proxies from beneficial owners.
Nordson Corporation – 2020 Proxy Statement | | 89 |
How will I know the results of the Annual Meeting? The final voting results will be tallied by our Inspector of Election and published in a Current Report on Form8-K filed with the SEC that we expect to file within four business days after the Annual Meeting.
If there is more than one shareholder living at the same address, will each shareholder receive proxy materials? To reduce the expense of delivering duplicate materials to shareholders sharing the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain shareholders of record who have the same address and last name will receive only one copy of the Annual Report to Shareholders and proxy materials until such time as one or more of these shareholders notifies us that they wish to receive individual copies by contacting us at the address and phone number below. Shareholders of record in the same household continue to receive separate proxy/voting instruction cards. In addition, if your household currently receives multiple copies of our Annual Report to Shareholders and proxy materials, you may “opt in” to householding for future mailings to receive a single copy of these documents.
We will mail materials that you request at no cost. You may contact us with your request by writing to or calling Corporate Communications, Nordson Corporation, 28601 Clemens Road, Westlake, Ohio, 44145 or440-414-5606. You may also access the Proxy Statement and Annual Report at:www.nordson.com/en/our-company/investors/annual-reports-and-presentations.
How do I submit director nominations or shareholder proposals for the 20202021 Annual Meeting?
Shareholder Proposals Submitted Under Rule14a-8
Assuming that our 20202021 Annual Meeting is held within thirty days of the anniversary of the 20192020 Annual Meeting, any shareholder who wishes to submit a proposal for consideration at the 20202021 Annual Meeting and for inclusion in next year’s Proxy Statement under Rule14a-8 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), should send the proposal to c/o Secretary, Nordson Corporation, 28601 Clemens Road, Westlake, Ohio 44145 for receipt on or before September 20, 2019.19, 2020.
Proposals and Director Nominations Submitted Pursuant to our Regulations
Additionally, under our Regulations, a shareholder may submit a proposal for consideration at the 20202021 Annual Meeting, but not for inclusion in next year’s Proxy Statement, if the shareholder provides written notice no earlier than 90 days and no later than 60 days prior to the 20202021 Annual Meeting. Assuming that the 20202021 Annual Meeting will be held on February 25, 2020,23, 2021, that means notice of such proposals must be received no earlier than November 27, 201925, 2020 and no later than December 27, 2019.25, 2020. Our Regulations are available at:www.nordson.com/en/our-company/corporate-governance.
Similar to the timeliness requirements under our Regulations described above, the notice of the nomination of a director must be received no earlier than 90 days and no later than 60 days prior to our annual meeting. Assuming the 20202021 Annual Meeting is held on February 25, 2020,23, 2021, the deadlines would be no earlier than November 27, 201925, 2020 and no later than December 27, 2019.25, 2020. The Governance and& Nominating Committee will assess the qualifications of the candidate according to criteria set out in Nordson Corporation’s Governance Guidelines, which are available at:www.nordson.com/en/our-company/corporate-governance. For a candidate to be considered for election as a director or for business to be properly requested by a shareholder to be brought before an annual meeting of shareholders, the shareholder must comply with all of the requirements of our Regulations, not just the timeliness requirements described above. Any proposal for inclusion in the proxy materials, notice of
proposal, or suggestion for nominee(s) for election to our Board of Directors should be sent to c/o Secretary, Nordson Corporation, 28601 Clemens Road, Westlake, Ohio 44145.
If the notices delivered pursuant to the Regulations are not timely received, then we will not be required to present such proposals or nominations, as applicable, at the 20202021 Annual Meeting. If the Board chooses to present any information submitted after the deadlines set forth in the Regulations (other than pursuant to Rule14a-8 of the Exchange Act) at the 20202021 Annual Meeting, then the persons named in proxies solicited by the Board for the 20202021 Annual Meeting may exercise discretionary voting power with respect to such information.
| 90 | | Nordson Corporation – 2020 Proxy Statement |
What is our policy governing communication with our Board of Directors?
Members of our management team regularly meet with shareholders to discuss a broad range of topics, including our governance and compensation practices. In addition, our Board provides to every shareholder the ability to communicate with the Board as a whole and with individual directors through an established process for shareholder communication.
Shareholders may communicate with the Board, the Chair of the Board, a Board committee, thenon-employee directors as a group, or individual directors by sending written communications addressed to the Board of Directors, a Board committee or such individual director or directors, c/o Secretary, Nordson Corporation, 28601 Clemens Road, Westlake, Ohio 44145.
Each communication should specify the applicable addressee or addressees to be contacted as well as the general topic of the communication. Our Secretary will initially review communications before forwarding them to members of the Board to whom the communication is directed, or if the communication is not directed to any specific member(s) of the Board, to the Chair of the Governance and& Nominating Committee. We generally will not forward a shareholder communication that is primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information about the Company. Concerns about accounting or auditing matters or possible violations of our Code of Ethics and Business Conduct should be reported pursuant to the procedures outlined in the Code.
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YOUR VOTE IS VERY IMPORTANT, SO PLEASE VOTE.
Promptly return your proxy/voting instruction card or vote via telephone or the Internet,
which will help to reduce the cost of this solicitation.
This Proxy Statement and the enclosed proxy/voting instruction card are first being mailed to shareholders of record on or about January 18, 2019.17, 2020. Nordson’s executive offices are located at 28601 Clemens Road, Westlake, Ohio 44145, telephone number(440) 892-1580.
Nordson Corporation – | | |
YOUR VOTE IS IMPORTANT. Please vote your proxy according to the instructions on the proxy/voting instruction card.
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NORDSON CORPORATION 28601 CLEMENS ROAD WESTLAKE, OH 44145-1119 | VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you may consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. If you vote by mail, your proxy card must be received no later than 11:59 P.M. Eastern Time the day before the cut-off date. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||
| KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
NORDSON CORPORATION
1. The election of Board recommendation: FOR all | For All
☐ | Withhold All
☐ | For All Except
☐ | INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark the box “FOR ALL EXCEPT” and write the
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01) 02) 03) 04) Michael J. Merriman, Jr. 05) Mary G. Puma | ||||||||||||||||||||||||
| For | Against | Abstain | ||||||||||||||||||||||
| 2. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending October 31, | ☐ | ☐ | ☐ | ||||||||||||||||||||
| 3. | Advisory vote to approve the compensation of our named executive officers.Board recommendation: FOR | ☐ | ☐ | ☐ | ||||||||||||||||||||
| NOTE: Such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. | ||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
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NORDSON CORPORATION
Annual Meeting of Shareholders
February 26, 201925, 2020
This proxy is solicited on behalf of the Board of Directors
The herein signed shareholder hereby appoints Joseph P. Keithley, Michael J. Merriman,Lee C. Banks, Randolph W. Carson, and Victor L. Richey, Jr., and Mary G. Puma, or any of them, as proxies, each with the full power to appoint a substitute, to attend the 20192020 Annual Meeting of Shareholders of the Company (the “Annual Meeting”) to be held at Baker & Hostetler LLP, Key Tower, 127 Public Square, Suite 2000, Cleveland, Ohio 44114, at 8:00 A.M., Eastern Time, on February 26, 2019,25, 2020, and any adjournment or postponement, thereof, to cast all votes that the shareholder or Plan Participant is entitled to vote at such Annual Meeting, as designated on the reverse side of this ballot, and otherwise to represent the shareholder with all of the powers possessed by the shareholder if personally present at the Annual Meeting. The shareholder hereby acknowledges receipt of the Notice of the Annual Meeting and the accompanying Proxy Statement, the terms of each of which are incorporated by reference, and revokes any proxy heretofore given with respect to the Annual Meeting.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. If cumulative voting is invoked, by a shareholder through proper notice to Nordson Corporation, this proxy will give the proxy holders authority, in their discretion, to cumulate all votes to which the shareholder is entitled with respect to the shares represented by this proxy and allocate them in favor of one or more of the nominees for director if any situation arises, which in the opinion of the proxy holders, makes such action necessary or desirable.
In order to ensure that your securities are voted as you wish, if you are a shareholder of record, the proxy must be voted by 11:59 P.M., Eastern Time, on February 25, 2019.24, 2020.
IMPORTANT NOTICE TO PARTICIPANTS IN THE EMPLOYEES’ SAVINGS TRUST PLAN AND EMPLOYEE STOCK OWNERSHIP PLAN (COLLECTIVELY, THE “PLANS”). |
John Hancock Trust Company, LLC, as Trustee of the Plans, has been requested to forward to you the enclosed proxy material relative to the securities held by us in your account but not registered in your name. Such securities can be voted only by us as holder of record. We shall be pleased to vote your securities in accordance with your wishes if you will execute this form and return it to us promptly in the enclosed business reply envelope. It is understood that, if you sign without otherwise marking the form, the securities will be voted as recommended by the Board of Directors on all matters to be considered at the meeting. |
For this meeting, the extent of our authority to vote your securities in the absence of your instructions, as directed by the Plans, is that securities for which no voting instructions have been given shall be voted in the same ratio as the ratio in which the total shares with respect to which timely directions were received were voted in such matters.In order to ensure that your securities are voted as you wish, the proxy must be voted by 11:59 P.M., Eastern Time, on February 21,
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Continued and to be signed on reverse side
